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com

Campaign for a Common Good Economy

Real Democracy. Real Money. Real Power. The tangible benefits of

UNDERSTANDING MONEY
& BANKING for the COMMON GOOD
By

John G Root Jr
This work belongs to the creative commons and may be reproduced and distributed by any means as long as it is not altered and is properly attributed with title and author and johngrootjr.blogspot.com. December 5, 2011

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UNDERSTANDING MONEY
"All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit, and circulation."

John Adams (from a 1787 letter to Thomas Jefferson)1 This quote is the theme of this campaign. We need to understand money! And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale. 2 "Bank-paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs."3

Thomas Jefferson
"The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent." John Kenneth Galbraith4 Is the truth evaded and disguised? Are banking establishments more dangerous than standing armies? Is there a deeper mystery? Is the monetary system fundamentally flawed? Is there another way to understand money? When we understand money, we will know that we, as a society, or community, can have all the money needed to pay for everything we consider worthwhile. When we understand money, we will know that money is an accounting system. Once we understand money, we will know that it is the goods and services that are valuable and not the money. The money represents the valuable goods and services. Money makes them commensurate so that we can exchange them. Money is the means of exchange. When we understand money, we will know that there are only natural limits, such as people with a desire to do something, the capability to do it, and the availability of the natural resources with which to do it. When we understand money, we will know that any shortage of money is artificial. There can't be too many people or too little work to be done, only a shortage of money with which to pay for it. Benjamin Franklin5 There are people capable of and willing to do the work people who have the skills and the knowledge to achieve these things. Our problems are not caused by a scarcity of people or ideas. There are even organizations who have the skills to hire the people and put them to work. This could all be done. What is missing? Everyone is waiting for money! Bernard Lietaer The Future of Money 2 of 29

Once we understand the monetary system, we will know that we have only credit and no money! And we will understand how determining of society that is. On January 24, 1939, Robert H. Hemphill, credit Manager of the Federal Reserve Bank of Atlanta, stated: "If all the bank loans were paid no one would have a bank deposit and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous: if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture the tragic absurdity of our hopeless position is almost incredible, but there it is. It (the banking problem) is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."6 (That all our money is borrowed is explained in detail later on.) When we understand money, we will know that bubbles and crashes, recessions and depressions are entirely engineered by the banking system through expanding and contracting the money supply with easy or tight credit. "When the President signs this act, the invisible government by the money power -- proven to exist by the Monetary Trust Investigation7 -- will be legalized. The new law will create inflation whenever the trusts want inflation. From now on, depressions will be scientifically created." Congressman Charles A. Lindbergh Sr. , 1913 regarding the powers of the Federal Reserve System 8. Once we understand money, we will know that inflation is caused by the banking system on purpose and on rare occasions deflation is as well. "By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft." British Lord John Maynard Keynes (the father of 'Keynesian Economics' in his book The Economic Consequences of the Peace)9 When we understand money, we will know that interest is a feature of the monetary system that automatically transfers the wealth from the vast majority of us who pay more interest than we receive to the very few who receive more interest than they pay. Once we understand money, we will know why every country is in debt and to whom. When we understand money, we will know that the U.S. and world monetary system is controlled by International Bankers for their benefit, and that it automatically transfers the wealth from us to them. "The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, 3 of 29

Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank, in the hands of men like Montagu Morgan of the Bank of England, Benjamin Strong of the New York Federal Reserve Bank, Charles Rist of the Bank of France, and Hjalmar Schacht of the Reichsbank, sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world." Carrol Quigley Tragedy and Hope 1963 Bill Clinton's mentor at Georgetown University Once we understand money, we will know the Banking Secret. The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in iniquity and born in sin. Bankers own the Earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough money to buy it back again... Take this great power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then this would be a better and happier world to live in. But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit. Sir Josiah Stamp, Director, Bank of England 1928-1941 (reputed to be the 2nd richest man in Britain at the time) from a lecture he gave at the University of Texas 10. When we understand money, we will know that the deception is based on gold being money, and that when it is we suffer and when money is an accounting system we are prosperous. Once we understand money, we will know that our well-being depends almost entirely on who issues the currency. Who should issue the currency? "We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it." Congressman Louis T. McFadden in 1932 (Rep. Pa)11 When we understand money, we will know why Congress continually borrows more money and why the interest on the National Debt may soon require the entire proceeds of the taxes we pay. Once we understand money we will know how absurd it is that whenever we seek to increase the national wealth we also increase the national debt. Did you know that about half the price you pay for things is interest? 12 Did you know that banks do not lend you their money, but monetize your promise to pay? Did you know that if everyone repaid all their loans there would be no money? Did you know that the permanent money supply is the National Debt because, since the days of Andrew Jackson, it has never been paid off. Do you expect it will ever be paid off? Did you know that almost all the popular assumptions about money, how it is created, and who 4 of 29

controls it, are wrong? SOVEREIGNTY Throughout history the sovereign has always issued the currency. One can discover who the sovereign is by understanding the monetary system in a particular place and time. The issue of sovereignty is of paramount importance in understanding money because money is so powerful in allowing one to shape the world in one's image. When Meyer Amschel Rothschild said: Permit me to issue the currency of a nation and I care not who makes its laws, 13, he was expressing this insight. If historians would follow the money who financed whom we would have a very different picture of how our society arose and how and why it continues as it does. This is the main fact which is obscure in conventional history and it has to do with the banking secret. You can discover the truth of it by reviewing the recent bailout of 2009 in light of these insights: Wall Street Banks got themselves in trouble by having the banking regulations repealed so they could pretend that bets were assets. When the bets went against them and they were bankrupt they told Congress to borrow enough money from them (initially $700 Billion now 1.5 to 3 Trillion) to give to them (to bail them out, or make them solvent,) so that they could lend it back to us! Congress complied over the strenuous objection of the American people, with some polls showing the opposition to the bailout at 98%, and I haven't seen a poll that was less than 67% opposition. The head of the Congressional Oversight Commission for the Toxic Asset Relief Program, TARP, Elizabeth Warren, has said on major media that she can't find out who got what and why,14 and Bloomberg Financial News has tried to find out what the Federal Reserve did, and can't, because the Federal Reserve has never been audited and is under no obligation to reveal what it does or why15. Who is in charge? The Wall Street banks and the Federal Reserve, or the Congress and the American people? Are we the sovereign? Are the Too Big To Fail Banks the hidden sovereign? Was there a time when the people were sovereign and issued the currency? Since this is the crux of the matter let us look at two times in American history when the currency was issued debt and interest free. The first was during Colonial times and the following story about Benjamin Franklin illustrates this very nicely. The second time was when the Lincoln Administration issued Greenbacks. BENJAMIN FRANKLIN Colonial Scrip: Principles of a Fiat Paper Currency16 In the American Colonies there was a chronic shortage of gold and silver coins. However, the native people would honor the gifts the colonists gave them, such as muskets and knives, horses and domesticated animals, with wampum (shells strung together to form belts, bracelets, etc.), and the colonists could spend that wampum with the Indians for food and pelts; and so wampum also became an accepted form of money. In most of the colonies, wampum was legal tender and one could pay taxes with it. What would become money generally was up in the air until Benjamin Franklin attended an Iroquois Nation powwow when he was a young man. He was very inspired by the separation of powers he found in their governance, which was an inspiration for our republic. While he was there a brave came into the camp laden down with wampum, which he proceeded to give to the chief who distributed it to all the chiefs of the tribes and clans. The chief recognized the question Ben Franklin had and explained to him that in Indian culture wampum is not money, but is used to make flags and belts to commemorate and remember all the events and gifts that are given during the year. Of course, there always has to be enough wampum to make all the ceremonial momentos we use to honor our gifts to each other. Ben Franklin realized in that instant that there always has to be enough money for all the transactions the people want to make. He became a major advocate of fiat paper money, called 5 of 29

Colonial Scrip, and attributed the prosperity the colonists enjoyed, to its use. When Franklin was in England representing the colonists he was dismayed to discover the unemployment and poverty and alms houses and debtors prisons there. It was explained to him that there was a population explosion and too many people without enough work. He wrote: There is abundance in the Colonies, and peace is reigning on every border. It is difficult, and even impossible, to find a happier and more prosperous nation on all the surface of the globe. Comfort prevails in every home. The people, in general, keep the highest moral standards, and education is widely spread We have no poor houses in the Colonies; and if we had some, there would be nobody to put in them, since there is, in the Colonies, not a single unemployed person, neither beggars nor tramps. This was not the case in England, which had the Bank of England and a debt-based monetary system in place and where debtors who could not afford to pay their debts were often thrown in jail. There was plenty of poverty in the streets of London and elsewhere. Here, Franklin explains the difference between England and her colonies: In the colonies, we issue our own paper money. It is called Colonial Scrip. We issue it in proper proportion to make the goods pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and have no interest to pay to anyone You see, a legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. Thus, when your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too little money in circulation, and that which circulates, all bears the endless burden of unpayable debt and usury. Soon enough, however, the Bank of England had Parliament impose restrictions on the Colonies issuance of Colonial Scrip. The first law was enacted in 1751, with more restrictive measures in place by 1763. Colonial Scrip became illegal tender, and the British Parliament declared that all taxes could only be paid in coin. Poverty and unemployment began to plague the colonies just as it had in England, because the operating medium had been cut in half and there were insufficient quantities of money to pay for goods and work. Indeed, this was the cause of the Revolutionary War, and not the Stamp Act or a tax on tea, as is taught in all history text books. The Colonies would gladly have borne the little tax on tea and other matters had it not been the poverty caused by the bad influence of the English bankers on the Parliament, which has caused in the Colonies hatred of England and the Revolutionary War. Benjamin Franklin17 One of the first Acts of the Continental Congress was to issue Continentals as the currency of the Colonies. It was the issuing of the Continentals that gave tangible evidence that the Colonies were united, and Continentals financed the Revolution. What is not taught in conventional history is that the British counterfeited more than twice the amount (perhaps 8 times) authorized by the Congress and after the War the currency lost its value until it was practically worthless. 18 When it came time to write the Constitution there was a general sense that coin was much more reliable than paper scrip and so the relevant paragraph reads: Congress shall have the authority To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;. To this day Congress issues the coins, debt free. ANDREW JACKSON and the Battle for the Bank Andrew Jackson ran for president with the slogan Andrew Jackson and no Bank. He vetoed the renewal of the Central Bank charter after declaring about the central bankers: You are a den of thieves 6 of 29

and vipers and I will roust you out! America had no central bank, but private banks issued their own debt based currency. The Government did not issue currency directly until Abraham Lincoln. ABRAHAM LINCOLN Abraham Lincoln on the subject of Constitutional Money; from an address to Congress in 19 1865 Money is the creature of law and the creation of the original issue of money should be maintained as the exclusive monopoly of national Government. Money possesses no value to the State other than that given to it by circulation. Capital has its proper place and is entitled to every protection. The wages of men should be recognized in the structure of and in the social order as more important than the wages of money. No duty is more imperative for the Government than the duty it owes the People to furnish them with a sound and uniform currency, and of regulating the circulation of the medium of exchange so that labor will be protected from a vicious currency, and commerce will be facilitated by cheap and safe exchanges. The available supply of Gold and Silver being wholly inadequate to permit the issuance of coins of intrinsic value or paper currency convertible into coin in the volume required to serve the needs of the People, some other basis for the issue of currency must be developed, and some means other than that of convertibility into coin must be developed to prevent undue fluctuation in the value of paper currency or any other substitute for money of intrinsic value that may come into use. The monetary needs of increasing numbers of People advancing towards higher standards of living can and should be met by the Government. Such needs can be served by the issue of National Currency and Credit through the operation of a National Banking system .The circulation of a medium of exchange issued and backed by the Government can be properly regulated and redundancy of issue avoided by withdrawing from circulation such amounts as may be necessary by Taxation, Redeposit, and otherwise. Government has the power to regulate the currency and credit of the Nation. Government should stand behind its currency and credit and the Bank deposits of the Nation. No individual should suffer a loss of money through depreciation or inflated currency or Bank bankruptcy. Government, possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by Taxation and otherwise, need not and should not borrow capital at interest as a means of financing Governmental work and public enterprise. The Government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of the consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Governments greatest creative opportunity. By the adoption of these principles the long felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts, and exchanges. The financing of all public enterprise, the maintenance of stable Government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own Government. Money will cease to be master and become the servant of humanity. Democracy will rise superior to the money power. There appeared in The London Times during the Civil War the following from Otto Von Bismarck: "If that mischievous financial policy, which had its origin in the North American Republic (the public issue of usury-free currency called Greenbacks) should become indurated down to a fixture, then 7 of 29

that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe." In 1876, Bismarck explained further: "The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe. These bankers were afraid that the United States, if they remained in one block and as one nation, would attain economic and financial independence which would upset their financial dominance over the world. The voice of the Rothschild's prevailed. They saw tremendous booty if they could substitute two feeble democracies, indebted to the financiers, for the vigorous Republic which was practically selfproviding. Therefore, they started their emissaries in order to exploit the question of slavery . . . Lincoln's personality surprised them. His being a candidate had not troubled them; they thought to easily dupe a woodcutter. But Lincoln read their plots and understood that the South was not the worst foe, but the financiers." Lincoln agreed: "I have two great enemies, the southern army in front of me and the financial institutions in the rear. Of the two, the one in the rear is the greatest enemy." 20 and "As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war. God grant that my suspicions may prove groundless." : U.S. President Abraham Lincoln, Nov. 21, 1864 - (letter to Col. William F. Elkins) - Ref: The Lincoln Encyclopedia, Archer H. Shaw (Macmillan, 1950, NY) After the success of the Greenbacks the Populists arose as a monetary reform movement, but they ended up concentrating on establishing a silver standard, because silver was plentiful and gold was scarce, and this culminated in the campaign of 1896. WILLIAM JENNING BRYAN The most famous speech in American political history was delivered by William Jennings Bryan on July 9, 1896, at the Democratic National Convention in Chicago. Two paragraphs contain the nub! We say in our platform that we believe that the right to coin money and issue money is a function of government. We believe it. We believe it is a part of sovereignty and can no more with safety be delegated to private individuals than can the power to make penal statutes or levy laws for taxation. Mr. Jefferson, who was once regarded as good Democratic authority, seems to have a different opinion from the gentleman who has addressed us on the part of the minority. Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson rather than with them, and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business.21 However, William Jennings Bryan was duped into supporting the Federal Reserve Act, because he was persuaded that it represented a takeover of the private banks by the Federal Government. 8 of 29

In this story about Edison and Ford we can see that there has been an awareness of the problem at various times since the establishment of the Federal Reserve System. EDISON AND FORD Henry Ford and the inventor Thomas Edison visited the Muscle Shoals nitrate and water power projects near Florence, Alabama. They used the opportunity to articulate at length upon their alternative money theories, which were published in 2 reports which appeared in The New York Times on December 4, 1921 and December 6, 1921. Objecting to the fact that the Government planned, as usual, to raise the money by issuing bonds which would be bought by the banking and non-banking sector -- which would then have to be paid back with money raised from taxes, and with interest added -- they proposed instead that the Government simply create the currency it required and spend it into society through this public project. Thomas Edison made it plain in the following excerpt from The New York Times, December 6, 1921 issue ("Ford Sees Wealth In Muscle Shoals"). Here, the reporter is quoting Edison: "That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt. "Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 -- that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost. "But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good. The difference between the bond and the bill is that the bond lets the money brokers collect twice the amount of the bond and an additional 20 per cent, whereas the currency pays nobody but those who directly contribute to Muscle Shoals in some useful way. " ... if the Government issues currency, it provides itself with enough money to increase the national wealth at Muscles Shoals without disturbing the business of the rest of the country. And in doing this it increases its income without adding a penny to its debt. "Look at it another way. If the Government issues bonds, the brokers will sell them. The bonds will be negotiable; they will be considered as gilt edged paper. Why? Because the government is behind them, but who is behind the Government? The people. Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit by receiving non-interest bearing currency on Muscle Shoals, instead of the bankers receiving the benefit of the people's credit in interest-bearing bonds?"22 What is particularly interesting about the article is that if you read the whole thing (at the link in the appendix) you come away with the impression that it is about whether Henry Ford should manage Mussel Shoals because he could do it better than the government. The article does not emphasize the monetary issue and somehow one is given the impression that the monetary issue is irrelevant. I find it fascinating that this continues to this day. How does the news media continue to obfuscate the obvious? 9 of 29

FRANKLIN DELANO ROOSEVELT In politics, nothing happens by accident. If it happens, you can bet it was planned that way. Franklin D. Roosevelt23 (why didn't he tell us by whom or add by the Money Power?) You may remember that it was Roosevelt who confiscated all the gold of the people and turned it over to the International Banking Cartel, and then raised the price, and it was Roosevelt who established the model of the Government running an ever increasing deficit. There is evidence that Roosevelt presided over the bankruptcy of the US, and the state of emergency that he declared in order to confiscate the gold has never ended. So how did it happen that we lost our understanding of money and our government lost the power to issue the currency? This is the history of the goldsmiths and how they became bankers! THE BANKING SECRET REVEALED During the Middle Ages, when the great Cathedrals were being built and the towns and cities were growing, money was mostly gold and silver coins and self issued credit called market money 24. As trade between towns and cities grew, transporting gold was dangerous and problematic. Gold can be easily stolen, it can be debased and weighing it is problematic. However, a receipt for gold stored with a Goldsmith was for a specific weight and purity, and as long as the goldsmith had a good reputation, the receipt, or claim check, was better than gold, because the purity and weight were assured. The receipt for gold being as good as gold was safe and convenient, and receipts for gold were easily signed over by the buyer to the seller and thus circulated as money, especially for the larger transactions. In order to understand how the modern banking system arose and why Sir Josiah Stamp says it was conceived in iniquity and born in sin, one must fully grasp the deception that took place. Some Goldsmiths became bankers when they lent receipts for gold they did not have and charged interest. Lending a receipt for gold you do not have and charging interest, means, of course, that you can create money out of the confidence people have in you and receive interest (something for nothing). This is the most lucrative con there is. Pretend you have gold, lend a good as gold receipt for gold you don't have, and charge interest! It is the very definition of a confidence trick! In order to get away with this deception it is essential that it not be discovered. This is the banking secret. Pretend you have money to lend, issue a claim check as a loan, (it is as good as gold), and claim interest! But, if you doubt that the receipt is as good as gold you will want the gold. If many people cash in their receipts the Goldsmith will run out of gold because he has lent many times more receipts for gold than he has in stock, either his own or his depositors. As you can easily imagine would happen the banking Goldsmiths banded together in a secret society to support each other. If there is a run on the bank, the Goldsmith closes his shop until his secret society brothers can supply him with enough gold to meet the demand and save the deception. Of course, banking goldsmiths and then bankers can pretend to have as much money as they reckon they can get away with. They pretend to have money, lend it and spend the interest on whatever they think is important, and the most important thing to spend it on is maintaining the deception. I wont describe here all the things the bankers secret society have put in place to maintain the deception, but it is nothing less than this society and world. At one point they did agree to pay interest on deposits and depositors were thus co-opted into the system. The whole system was legalized in England with the establishment of the Bank of England in 1694 and in America by the Federal Reserve System in 1913. If you are amazed that you didnt know the banking secret, then you know how successful they have been at keeping it secret. There is something very appealing about interest. Interest enables us to let our money work for 10 of 29

us. That appeal keeps us co-opted. You are probably planning to retire on the money you saved your whole life. But you know that the value of your investments are at the mercy of the bankers. How much did you just lose? Where did that value go? Also, if you can borrow money created beyond the actual amount of the gold and silver available, then you can create a new business or mount a trading expedition. By expanding the money supply Bankers enabled the Age of Discovery and then the Industrial Revolution. But, Bankers gave rise to the society we live in today because they determine what is credit worthy. You can only borrow money for what bankers agree to! And through it all they receive the interest on the money they pretended to have and lent you, and they spend that interest to manage society for their benefit and to protect the banking secret! Have they succeeded in organizing society so that you don't understand money and accept a system that continuously impoverishes us and enriches them? Would you rather have debt and interest free money, created by us for our benefit? Ultimately this is what common good banking is all about. WHERE DO THE BANKS GET THE MONEY THEY LEND YOU? Banks do not have money to lend. When we borrow money from a bank we assume that the money we are borrowing comes from what the banks have, or the deposits others have, in the bank. This is natural, because when you lend someone money, you have to lend them some of your own money. Banks do not lend us their own assets, or money they earned, the way we do when we make a loan to someone, rather, banks issue, or create, the money they lend you when you promise to pay it back. Banks monetize your promise to pay! Your debt, your promise to pay, becomes their asset. Your promise to pay is valuable. When your promise to pay is backed by a mortgage or collateral your promise to pay is more valuable because the mortgage is easier to enforce than an IOU. In banking circles this is a well known fact, but it is not the way it is usually represented. However, describing it this way makes it clear that you provide everything of value when you borrow from the bank and the bank provides nothing of its own. Put differently, when you borrow from the bank your promise to pay becomes their asset and your liability and the money they create with an accounting entry, and deposit in your account, is their liability and your asset. And you have to pay them interest, which for a typical mortgage will be more than the principle, so twice as much as you borrowed; and, if you default on the loan, they get the valuable things you acquired with the loan! IS THIS LEGAL? Yes, it is legal. The whole financial system is based on it. It is called Fractional Reserve Banking and it became legal with the Federal Reserve Act of 1913. The Federal Reserve issues the currency - our legal tender - to the Federal Government on the basis of the Federal Government's promise to pay! The member banks which own the Federal Reserve use their deposits with the Fed as the basis for their right to create the money they lend you. They keep a fractional reserve, a fraction of their deposits, as a reserve and create money as loans to whatever multiple of their deposits the Fed has decreed (usually between 6 and 30 times as much as they have on deposit) The courts have been enforcing this system ever since. IS IT CONSTITUTIONAL? No! The Constitution gives Congress the authority to issue the currency, debt free and interest free, and to regulate its value. Since the Federal Reserve was established by an act of Congress and not by an amendment to the constitution, it is still an unconstitutional law. Understanding money will help us remedy such acts of treason by Congress. Our constitutional rights are not granted to us by the Constitution, they are inalienable rights. We institute government to secure our inalienable rights. 11 of 29

When we understand money we will know that we have the inalienable right to issue the currency as a common good. IS IT A SECRET? Yes! It is the "banking secret". As Henry Ford and Andrew Jackson before him, said: It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. and Marshall McLuhan: Only the small secrets need to be protected. The big ones are kept secret by public incredulity. UNDERSTANDING MONEY These are bold statements. They probably create a strong desire in you to dismiss them and the author. If they are true then your world view must change, your understanding of how the world works must be radically revised. If you re-read the first statement: When we understand money, we will know that we, as a society, or community, can have all the money needed to pay for everything we consider worthwhile. then you will know why it is worthwhile to suspend your disbelief, summon your courage and proceed. In thinking about the above quotes it could be helpful to remember that your world view is made up of the concepts you use to explain your perceptions. Please remember that you are under no obligation to accept the ready made concepts from the culture, the media or your education. You can, and hopefully will, hold those concepts at bay and entertain the concepts presented here. Do the ideas presented here give you more freedom? Will the concepts presented here increase your capacity to love your neighbor and the world? Will understanding money as presented here give us a society to benefit everyone? Will understanding money allow us to heal the environment, end poverty and create a lasting peace? Please bear these questions in mind as you study this material. You have nothing to lose and everything to gain! Economics is called the dismal science for a very good reason. The concepts that it uses to explain human behavior are not accurate, it is not an empirical science but an ideological one 25. What do Adam Smith and Karl Marx have in common? They both maintain that only gold is money! That idea is wrong and that idea serves only bankers. The promulgation of the ideas of both Adam Smith and Karl Marx were funded by the owners of the Bank of England26. Since economics, as it is taught nowadays, is ideological and obscures the debt based monetary system, we will need to develop a true social science of economics. To make a beginning with this we need to start with what is self-evident. Human Nature of Exchange The self-evident concept, which underpins all the rest of these ideas, is in three parts: 1. Economics is about the production, distribution and consumption of goods and services through exchange. Exchange is the essence of economics. It is through the exchange process that goods and services go from production to distribution to consumption. Each step along the way they are exchanged at a price. 2. It lies in our nature as human beings that we make an exchange when we judge that the exchange will make us better off. If we look at exchange exactly we can see this. We make an exchange what I have for what you have when we make the judgment that at the agreed price we will be better off. Both parties to the exchange do this, and so exchange makes both parties better off. When I walk into a store I am aware of what I have (in the form of money) and the store has already determined, by determining the prices on the things it sells, that it will be better off if I buy anything for sale there at the stated price. So I look at the items I need or want with their prices, and 12 of 29

mindful of what I have, I select things to buy, making the judgment that at the stated prices I will be better off for buying them. When I leave the store, having paid for my purchases, I am better off and the store is better off. That is the nature of exchange. It is perhaps a little clearer when the buyer and seller negotiate a price. When they agree a price it is because they both reckon they will be better off as a result of the exchange. If they can not agree a mutually beneficial price, they forgo the exchange. The exchanges that I make, that you make, that everyone makes are made because they make us better off. Therefore, in the aggregate, it is reasonable to expect that all the exchanges will make everyone increasingly better off. The increase is due to human nature, not the difference in nature between the human beings who are party to the exchange. The increase results from our being together in a society and an economy in which there is plenty to exchange, - people providing goods and services for each other that we need or want, resulting in exchanges that make both parties better off and in the aggregate everyone better off. 3. Are we increasingly better off?27 Do we all enjoy a rising standard of living? If not, why not? Might there be something which is siphoning off or appropriating the increase? Could it be that the surplus is being siphoned off by interest? Should interest be a feature of the monetary system? What are the consequences of the idea that your money can work for you? What is real wealth? What is phantom wealth? What is money? Money as Power Money gives us a claim on the resources and labor of society the goods and services that make up the economy. We need money to live and the more we have the better we live. And, the more we have, the greater our claim on the productivity of society and the greater our ability to shape society as we would like it to be. If very few people (1/10 of 1%) have control of half the entire income of the planet then the power imbalance is so extreme it is not unreasonable to believe they created this society. If we, as the sovereigns, reclaimed the power to issue the currency for what we democratically decide is beneficial, then it is easy to imagine an environmentally sustainable, peaceful world, with an equitable distribution of the wealth. Money is power, and with the money power in the hands of 1/10 of 1% of the people the power imbalance needs to be addressed before we destroy the planet. It is imperative that we understand money! Money as Measure To measure value we use dollars and cents, much as we use hours and minutes or feet and inches. We use dollars and cents to measure the value of all the goods and services available in the economy so that we can compare them to each other and make reasonable decisions about what to buy or sell and at what price. The dollars and cents as prices are crucial to making decisions about which exchanges will make us better off. Money as Means of Exchange The dollars and cents we use to measure value make all the goods and services commensurate and thus exchangeable. To effect the exchanges, we use a device or instrument we call money. The difference between the measure (dollars and cents) and the instrument we use to make exchanges is similar to the difference between hours and minutes and our watch or clock. The watch or clock makes the hours and minutes useful, the money makes the dollars and cents useful. Let us bear that in mind. Dollars and cents are not money, they are the units of the measure of value. Money is the device that allows us to make use of them. 13 of 29

Money as Commodity Gold and Silver have traditionally been thought of as money, but they are commodities and as such they are scarce and subject to market forces. A valuable commodity cant also be the measure of value for everything else without distorting the value of all the other goods and services. A commodity never has and never will be as good as money for effecting exchanges. For many centuries now, there has not been enough gold or silver to function as money and the convertibility of bank notes to gold has always been a fraud. When money is thought of as a commodity, or a stand in for a commodity, then it can be thought of as valuable in itself. But you don't want the money, you want what the money will buy! Money is not valuable in itself, it only represents value. Money as Legal Tender or Fiat of the Law Money is either legal tender or it is a commodity, but not both. When gold is legal tender its face value has to be more than its commodity value for it to function as money. If the value of gold or silver rises above the gold or silver coin's value as legal tender it ceases to function as money and becomes gold or silver! When gold or silver coins are money, their intrinsic value is irrelevant to their function as money. And, of course, when paper notes are legal tender their lack of intrinsic value is irrelevant in their use as money. Money, legal tender, is a fiat of the law, provided by the law giver. The association of gold or silver with money has been used by the bankers to confuse the issue of what money is since the dawn of civilization. Because it is easy to understand that a commodity like gold could be scarce or abundant it is easy to imagine why there might be too little or too much money. Money as Accounting The transfer of money by check or debit card between bank accounts in the banking system makes it clear that money is not physical but rather a matter of accounting. Federal Reserve Notes are a very small percentage of the money in circulation. We use banks to settle the accounts between us. When I write a check or swipe my debit or credit card I am instructing the bank to settle the account between me and the merchant. I get the merchant's goods, the merchant gets my money, via the bank. It is called checkbook or deposit money and the whole banking secret is based on it. When we use paper money we don't need banks, but banks provide the accounting services and account settlement services we need for our complex commerce. Also, banks make it possible to conceal the difference between money and credit. Because of the accounting aspect of money, it is easy to conceal the fact that there is no money, only credit. Barter and Mutual Credit All of the above becomes abundantly clear when one looks at modern barter systems, especially those that use mutual credit as money and dollars and cents as the unit of value. By placing goods and services, for which there is a demand, into the barter network at a price expressed in dollars and cents, businesses can use the value of their offerings to trade or buy anything else being offered in the barter market. Trading money (mutual credit), not Federal Reserve money, is used to represent the offerings. The trading money is accounting for the real goods and services being bought and sold. Trading money, valued in dollars and cents, is the means of exchange. A new member is given credit (and a credit limit) and their account is debited or credited with each sale or purchase. The money is obviously all accounting! Savings and Interest 14 of 29

A major appeal of gold and silver as money is as a store of value. If the value of the gold and silver is intrinsic then when the face value of the coins drops below the metallic value, the money is still valuable as gold or silver and thus effectively stores value. This is also the source of the idea that interest or usury is legitimate and that your money can work for you. If you lend money at interest, because it is valuable in itself (gold or silver), not just accounting for real goods and services, then it can seem reasonable to expect a return. However, because the money is really how we account for the real things that are valuable this distorts the economic process and transfers the wealth to lenders. If the value of the money were maintained, the money would retain its value and would store value until needed in the future. If money were understood as accounting, an equity stake in an enterprise would provide for the desired increase from saving or storing surplus value and remain related to the real world fortunes of that enterprise. Interest accrues regardless of what happens in the real world and is therefore entirely abstract. It is a legally sanctioned abstraction that automatically transfers the wealth from those who pay more interest than they receive to those who receive more interest than they pay. How is Money Created? Now we get to what the Federal Reserve has called money mechanics 28. All the money in circulation, except coins, is created by banks as credit, as IOUs, as the principal of a loan. The borrowers promise to pay becomes an asset of the bank against which it creates a liability, the money it lends us. Money is created with accounting entries, assets and liabilities. Promises to pay and loans. When we lend someone money we have to lend them our money, but banks create the money that they lend us. Did you think that banks lend us their money or their depositors money? Did we commit to leave our money on deposit for 30 years? As you know, this is the banking secret. Banks create almost all the money in circulation, and they do it as debt to them and then they collect interest, and with a typical mortgage we will repay twice or more than we borrowed! That is one house for us and a bigger one for the bank, simply because we consent to the system because we don't understand it! Credit Money Almost all of what we think of as money is created as the principal of a loan. From the banks point of view, the asset is the promise to pay and the liability is the loan money. As the loan is repaid the banks asset is reduced and the corresponding liability the money - is reduced, until both the asset and the money are extinguished when the loan is repaid. If that is hard to grasp remember that it is all accounting entries. There is nothing but accounting entries. Your promise to pay is an accounting entry, the money deposited in your account is an accounting entry. One goes down so does the other! When the loan is paid the asset ceases to exist and the money is extinguished. If everyone paid off their loans there would be no money. This is another of the banking secrets, which arises from the logic of the system itself. The permanent money supply must therefore be the debt that is never repaid; i.e. the Federal Debt. Money as Credit A promise to pay, or an IOU, is, by its very definition, not the money, but an obligation to provide money according to the terms of the promise. In the abstract world of money as credit, a promise to lend you a car is considered the same as lending you a car. This is absurd, because in the real world a promise to lend you a car does you no good if you need a car. This does, however, illustrate how a fiction can be implemented in the real world, or how important the concepts that make up our consciousness are in creating the reality we live in.

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Interest What we think of as money is created as the principal of a loan which must be repaid with interest. Where, in this system, is the money to pay the interest ever created? All the money to pay the interest must come from new loans, which in turn bear interest. Some economists have estimated that 50% of the prices we pay for things is interest. Most of us (98%) pay more interest than we receive and a very few (2%) receive more interest than they pay. Interest automatically concentrates the wealth in the hands of the few. Circulation The loan money will circulate in the economy facilitating many exchanges before it is extinguished as it is used to repay the principle of a loan. The money paid as interest will also be spent and circulate in the economy. Circulation, however, only extends the time frame until the money is eventually extinguished as it repays principle. Because the interest circulates as money also, the effect of interest is really the question as to whether the recipient deserves the claim on our labor and resources it represents. Certainly if you or I lend money we can feel justified in receiving interest, but the banks? What did they do to earn the interest? Consequences Only coins are issued as money. All the rest of the money is issued as debt or credit. With what shall we pay? More promises? If all the money is created as debt and is extinguished as the debt is repaid, where is the permanent money supply? The permanent money supply has to be the debt that no one expects will ever be repaid! Do you expect the Federal Debt will ever be repaid? The Federal Debt is the permanent money supply! All the funds collected from the income tax will soon be insufficient to pay the interest on the Federal Debt! Because of the design of the system there is always more money owed than exists. Everyone must go deeper into to debt to provide the money to pay the interest. This makes money scarce, one might say that money is the only scarce resource. Interest automatically transfers the wealth from the 98% of us who pay more interest than they earn, to the 2% who receive more interest than they pay. In order to keep up with the interest owed the financial system has to continually grow. New debt has to continually be incurred to provide the money to pay the interest. More Consequences At what point does the interest on the Federal Debt become un-payable? As a result of the bailouts (more debt) interest will soon be the single largest expense in the Federal Budget! The current 11.6 Trillion Dollar debt costs about $700 billion in interest each year. Who is earning that interest? Is it reasonable that the money center banks that caused the financial crisis that required the bailout should receive the bailout money and the interest on the increased Federal Debt that was used to pay the bailout? However, increasing the Federal Debt was necessary to increase the permanent money supply to lessen the effect of the credit crunch. The Growth Imperative Compound interest makes it necessary that the financial system grow whether or not this relates to growth in the real economy. The rule of 72 states that money earning 1% will take 72 years to double. If I am receiving 6% on my money it will take 12 years for it to double. The short term thinking that most companies are forced into is a requirement of the monetary system because of compound interest. The net present value and discounted cash flow calculations are based on what 16 of 29

money could be earning as loans. Corporate raiders have demonstrated this many times by buying up a well run company with a lot of equity by borrowing money to monetize the equity and thus turn the equity into debt . The forest is worth more clear cut now than in 20 years simply because the money realized when invested in debt and left to compound grows faster than the trees! It is the thought that the money is valuable in itself that allows this fiction. The money can't possibly grow faster than the real goods and services it represents. But our society is based on this fiction and it will continue to impoverish us and destroy the planet until we recognize that it is fiction, or phantom wealth29. Sovereignty During colonial times the question of sovereignty was in the forefront of the peoples minds. There is a wonderful sense of security in having a King who is responsible for the well being of society. If we are loyal to the King, the King will take care of us. He is the lawgiver, he protects us. The passing of the sovereignty from the King to the People was what the American Revolution was all about. We are responsible for us. We instituted a government to secure our inalienable rights. We are responsible to assure that the government serves us. Is it time to reclaim our sovereignty and issue the money so that we control the economy, so that money represents reality? Is it time for us to issue money as a public good, a measure of value and means of exchange? Real Money Real money is, and can only ever be, the circulating medium of exchange issued by the sovereign to serve the needs of the people. Real money is a public good not a private privilege. Real money measures value and enables us to effect exchanges, and benefits everyone equally. Real money is a fiat of the law. The US has not had real money since the Lincoln Administration issued Greenbacks, and for the year or so that Kennedy issued silver certificates. Who is the Sovereign? Are we the people the sovereign? Are the Banks which issue the currency as debt the sovereign? What if we decide once again that we the people are sovereign and reclaim the power to issue the currency? Do you think we would issue it as debt bearing un-payable interest? Or would we spend it into circulation to pay for the government services we as the sovereign people democratically decide are needed? When we understand money we will issue the right amount to represent the real wealth created by all the people! And as the commonwealth increases due to all the exchanges, more money will have to be issued to account for the due-to-human-nature increase from exchanges. United States Money The Federal Government could, and has in the past, issued the currency to pay for the legitimate goods and services the government is charged with providing. A debt and interest free currency spent into circulation would obviate the need for taxes. The statistics gathered by the Commerce Department and the Federal Reserve can be used to regulate the money supply so that the value of the dollar remains constant, and therefore there would be no inflation or boom or bust business cycle and no growth imperative. Contrary to the myth, Government issued real money has been absolutely reliable in the past. And we could make sure it would be again. The Science of Money Money is a public good like any other measure. It needs to be regulated to ensure that it is a reliable measure. More money in circulation than is justified by the goods and services available and 17 of 29

prices rise, or the money becomes less valuable; less money in circulation than needed and prices fall, people cant pay their debts, products cant be sold, unemployment rises, etc. What is a recession or depression? Did something change as far as the resources, skills and willingness to work are concerned? No, the only change is a shrinking of the money in circulation so there is no longer enough circulating medium to make all the payments that were being made before the shrinkage. The science of money is the regulation of the money supply so that prices remain stable. The money is not valuable in itself. It represents and makes commensurate the value of the real goods and services in the economy. Good data collection, which we have, is all that is needed to regulate the money supply and keep prices stable. The science of money may have been lost as public knowledge, but it is not lost as a private banking secret. The science of money, the effect of increasing and decreasing the money supply, is well known to the central bankers and they continuously take advantage of our ignorance. Capitalization Issuing real money to capitalize an enterprise or build infrastructure, or any other need that requires a large amount of capital, as in the Muscle Shoals example Henry Ford and Thomas Edison referred to, may become the most creative opportunity (as Lincoln said) for community banking in which the people are sovereign. Because raising the money is not an issue, i.e. we understand that we can just issue it to increase the commonwealth, the process whereby the people decide what to fund and how that will be managed, etc. will be a wonderful opportunity to exercise our new found sovereignty. What values will be evident in what we decide to capitalize? If we are truly able to express our collective will through a well designed democratic process we can be confident that society would reflect the values we hold dear. However, from the point of view of the science of money the new capital will either be properly represented by what it was spent on and increase the community wealth, and therefore require the issue of more money to represent the increase, or if the enterprise fails, the money created will not properly represent what happened, and that much money will need to be withdrawn from circulation to keep the value of the money constant. Being able to issue real money to capitalize projects we believe in will give new meaning to the phrase: Government of the people, by the people, for the people. Please let this sink in: Real money means that there will be no shortage of money. Everything we as a community decide is worthwhile can be done. The question is not: Where will you get the needed money? but rather: Are there people willing and capable of doing it and is it a sustainable use of the needed natural resources? If so, let us, as the sovereign, issue the money to accomplish it! What Can We Do? Understanding money gives us numerous possibilities for reform. Because the money issue is so central to the way that society is organized it is very difficult to imagine how profoundly beneficial issuing real money will be. Imagine that the amount of money in circulation is equal to all the goods and services that are available and that the distribution of the money, and therefore the goods and services, is just, because it was decided by we the people not the international banking cartel. Now imagine that we, as a community or society, want to do something we consider worthwhile, such as convert the economy to renewable energy. We don't have to borrow the money to do it, we don't have to raise taxes, we just issue the money! Assuming that what we issue the money for, does increase the common wealth, then, the most pressing question becomes what shall we do with the surplus that arises from the human nature of exchange? This is so huge that everything changes when you contemplate it. National Proposals 18 of 29

I am aware of four proposals for reform of the monetary system at the national level. If you believe that there is still a possibility of rescuing our sovereignty from the privately owned Federal Reserve and Bank for International Settlements through the existing political process, then these are worth supporting. The American Monetary Institute has written legislation, The American Monetary Act that would authorize Congress to take over the Federal Reserve and issue United States Notes debt and interest free to rebuild the infrastructure and provide the money for Health Care and other needed services30. Dennis Kucinich is an advocate of this approach. This is Stephen Zarlenga's approach and is based on his book The Lost Science of Money. Zarlenga says: Money is an abstract social power based in law and whatever government accepts in payment of taxes will be money. Go to: http://www.monetary.org/ for more on this. NESARA is a proposal supported by the those who believe that only gold is real money, which would authorize Congress to re-monetize gold and issue gold certificates as the lawful (fiat) money. The value of gold would be legally determined based on the amount of gold backing the currency. Gold coins as well as 100% gold backed gold certificates would be the currency and banking would be the same as we imagine it to be, where banks settle the accounts between us (check clearing) but could only lend money they actually had on deposit. NESARA is flexible in that it would allow an expansion of the money supply through fractional reserve lending, but the reserve would be real. The result of the credit creation/money supply expansion, would be the periodic revaluation of the gold backing it! Go to: http://www.nesara.us/pages/home.html to learn more about NESARA Social Credit is a proposal going back to the time of the creation of the Federal Reserve System that is based on the Congress issuing the currency (as fiat of the law) to represent the value of the real goods and services in the economy and distributing the resulting surplus through a dividend paid to everyone. Instead of paying taxes, we receive a dividend for being a participant in the economy. The rationale for this is that the economy is created by both producers and consumers and consumers need the buying power necessary to buy everything that is offered. Social Credit would create a democracy of consumers served by an aristocracy of producers. Under a social credit regime the money would be issued to the people so they can buy the products of the economy, not to the producers so they can produce. Social Credit is currently most ably represented by the Michael Journal. Go to: http://www.michaeljournal.org/10lessons.htm and download the book (don't be put off by the religious element, it is not essential, but the morality and fairness it represents is) The Wikipedia article on social credit is also helpful. Digital Coin is a proposal by Paul Grignon for a self regulating money system based on the internet. It consists of perpetual coin (digital) which is the measure of value and is kept in limited supply so that it maintains its value, and credit coin (digital) which is self issued credit by the providers of goods and services. Perpetual coin represents the existing economy and credit coin is issued by producers to finance their operations. The credit coin circulates at a varying discount to perpetual coin and is redeemed when it pays for goods or services of the issuer, with the greatest discount being offered when the coin is most advantageously redeemed. There are a number of videos by Paul Grignon that are wonderful explanations of much presented in this booklet, including Money as Debt, Money as Debt II, Promises Unleashed, The Essence of Money, A Medieval Tale and Digital Coin, all available at www.digitalcoin.info Local Currencies The complementary currency movement is widespread and growing. A most interesting aspect of local currencies is that the design of the currency gives very different experiences. So, for example, 19 of 29

the experience of using Ithaca hours or Berkshares, or time dollars, is very different. One of the best known of the local currencies is Berkshares. The rationale for Berkshares is that they offer a discount for shopping locally and are redeemable for Federal Reserve credit. This makes it easy for businesses to accept them and easy for consumers to use. Berkshares notes are beautifully designed and reflect the rich cultural heritage of the area, with portraits of famous local people. However, Berkshares have to be bought at local banks. $100 gets you BS105 and can be cashed in again. They are not being issued directly or as credit and so are really a discount coupon on the dollar, an incentive to buy locally. Mutual Credit Associations Business to business barter networks, LETS (Local Exchange Trading Systems) and mutual credit clearing systems are all examples of money as accounting being practiced in many places around the world. When you join the network you are able to buy and sell from members of the network with credit the members extend to each other. Generally speaking these systems are very successful when the number of participants is large enough and includes enough opportunities for people to earn credits by selling their labor or expertise. In Switzerland there is such a system called the WIR which has operated successfully since the Great Depression with the number of transactions done in WIR increasing whenever there is a shortage of Swiss Francs and decreasing as SF become more plentiful again. Common Good Bank However, if you believe that it is up to us to think globally and act locally then you can support the establishment of the Common Good Bank and participate in developing a Common Good Community. The Society to Benefit Everyone, Inc., doing business as Common Good Finance, is a charitable company which developed and is promoting the establishment of the Common Good Bank with local branches, common good communities, all across the US and eventually the world. The Common Good Bank is designed to bring a just abundance and environmental healing to every community that establishes a common good community, and to do it quickly and surely. The Common Good Bank is designed to create a society to benefit everyone. The Common Good Bank is not another bank with a social mission, rather it is a social mission with a BANK! The Common Good Bank is a revolution with a bank. The Common Good Bank offers a transition that returns our sovereignty to us and will allow us to issue the currency debt and interest free to pay for those things which we agree will benefit our community, our region, our country and the world. Join Us Visit the website: www.commongoodbank.com and read all about the plans for establishing the Common Good Bank. Sign up as a Founding Member. Attend our organizing meetings and donate to fund our campaign for a common good economy, pledge a loan to charter the bank and pledge to buy a share of the bank when it is chartered. Donate and pledge whatever feels right for you! You can find a local Common Good Community Organizer, or become one, at the website. Find out More Web of Debt by Ellen Brown Agenda for a New Economy by David Korten The Lost Science of Money by Stephen Zerlanga. 20 of 29

The Future of Money by Bernard Lietaer The End of Money and the Future of Civilization by Thomas Greco Money as Debt video available at video.google.com Money as Debt II Promises Unleashed available at moneyasdebt.net Digital Coin, Perpetual Coin and Credit Coin, at www.digitalmoney.info Watch the videos, especially The Essence of Money, A Medieval Tale! And www.commongoodbank.com COMMON GOOD BANK It is OUR bank, WE decide! COMMON GOOD BANKS WILL BE DIFFERENT. All profits go to schools and other nonprofits. Owners decide what the bank should invest in. Free local credit card processing for local businesses. Micro-loans for new businesses and community projects. Full range of secure, FDIC insured banking services. Committed to sustainability and economic justice. Study the Website The commongoodbank.com website is deep. It explains how the Common Good Bank system will work, how it can create a local currency among all its members that exists only in the bank and which therefore does not require any of the inconvenience of a paper currency. The exchange between the mutual credit of the Common Good Community and Federal Reserve Credit is explicit on your monthly bank statement. The Common Good Bank can create money for those purposes its depositor owners vote for, and exchange it for Federal Reserve credit so it can be spent anywhere. Design All of the innovations of the Common Good Bank are proven in other settings, the combination is unique to the design of this bank. The Common Good Bank was designed by the Society to Benefit Everyone and is being promoted under the name Common Good Finance to provide a sure and rapidly deployable remedy to our debt based monetary system for any community that cares to implement one. Direct Democracy Our winner take all democratic system is so easily gamed that we often feel cheated, that we have no real choice. The democratic system designed into the Common Good Bank cannot be easily subverted. It is based on face to face meetings, one person one vote, 100% participation and ranked choice or instant runoff voting (liquid democracy). One person one vote, not number of shares owned, assures all the participants are equally empowered. You appoint a proxy whose vote counts for you if you don't vote yourself, and if your proxy doesn't vote their proxy's vote counts for all three of you, etc. You may change your proxy at any time and those who are the proxies for the most people become trusted persons, because they are trusted by the most owners, and they direct the affairs of the local branch of the bank. When you vote, you rank the choices, first, second, third, etc. or none. The choice with the fewest first choice votes is eliminated and the second choice becomes first choice on those ballots and they are counted again. This process of ranked choice voting including Condorcet pairs, together with other methods, assures that the most preferred choice wins. This system lets democracy tend towards consensus and makes democracy direct and effective and eliminates the ways the existing 21 of 29

system can be manipulated. Directing the Bank Common Good Bank stock will be owned by Common Good Finance, which is the not for profit membership organization that has designed and will charter the bank. Your membership gives you your right to vote, one person one vote, it also makes you a member of your common good community branch of the bank. Common Good Finance is governed by representation from the members up and the board down. It is designed to allow leadership to bubble up from the membership. What kinds of projects should the bank lend to? Rank the choices! Which schools and charities should the bank give its profits to? Allocate 100 virtual pennies! What projects should we issue local money to support? What ideas do you have that would make for a society that benefits everyone? You get the idea! All major decisions of the Common Good Bank branches are discussed in meetings and voted on by its owners, all decisions affecting the Common Good Bank as such are made by its Board of Directors just as in a conventional bank, except for distribution of profits which is determined by a penny (percentage) vote. Establishing the Bank Common Good Finance oversees the chartering of the Common Good Bank. Currently Common Good Finance is seeking Founding Members to donate to the Campaign for a Common Good Economy, to lend interest free to charter the bank and pledge to capitalize the bank when it is chartered. Finding Founding Members in the Pioneer Valley and Berkshires of Massachusetts is critical to establishing the bank. However, to become a local Common Good Community once the bank is chartered will only require a minimum of 75 businesses and individuals, with at least one business that will be able to provide cash for depositors using their Common Good Bank card (like a debit card) and at least one nonprofit willing to assist depositors with the paper work. It will also be helpful to have many businesses offering a discount to depositors. Half of the discount goes to the benefit of the depositor and half to the Community Fund of the local CGC. Half of the Community Fund is granted locally and half is granted somewhere else in the world we want a society to benefit everyone. Capital and Grants Common Good Communities will have the opportunity to develop a real social science of economics since they will be able to visualize the economic process. Economics is about the production, distribution and consumption of material goods and services by bringing the intellectual capital of the culture to bear on transforming nature. The intellectual capital was created by those who consumed the material goods and services in the pursuit of science, art and religion. Material goods and services create surpluses or profits and can be appropriately funded by issuing capital (loans and equity) that can be returned to the issuer through the surplus values resulting from exchange. The surplus value can then be granted to increase the culture (education, art and religion in their broadest sense). So we can visualize the process as issuing capital to create the material goods and services which generate a surplus that can be granted to create cultural values by consuming the material goods and services. The intellectual capital currently available is such that capital properly issued will create the solution to all the problems we experience that result from money being debt based and scarce! Do we have all the ideas and technologies needed to replace fossil fuels, and end the wars for oil? Of course we do. All we need to do is capitalize them! When we issue the money for what we decide will give expression to our values, everything changes.

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Take Action and sign up as a Founding Member. Go to www.commongoodbank.com Cognitive Dissonance As you think about all these ideas and their implications it can be helpful to understand cognitive dissonance. Here is the description from Wikipedia. Cognitive Dissonance is an uncomfortable feeling caused by holding two contradictory ideas simultaneously. The "ideas" or "cognitions" in question may include attitudes and beliefs, and also the awareness of one's behavior. The theory of cognitive dissonance proposes that people have a motivational drive to reduce dissonance by changing their attitudes, beliefs, and behaviors, or by justifying or rationalizing their attitudes, beliefs, and behaviors.[1] Cognitive dissonance theory is one of the most influential and extensively studied theories in social psysychology. Cognitive Dissonance normally occurs when a person perceives a logical inconsistency among his or her cognitions. This happens when one idea implies the opposite of another. For example, a belief in animal rights could be interpreted as inconsistent with eating meat or wearing fur. Noticing the contradiction would lead to dissonance, which could be experienced as anxiety, guilt, shame, anger, embarrassment, stress, and other negative emotional states. When people's ideas are consistent with each other, they are in a state of harmony, or consonance. If cognitions are unrelated, they are categorized as irrelevant to each other and do not lead to dissonance. A powerful cause of dissonance is an idea in conflict with a fundamental element of the self-concept, such as "I am a good person" or "I made the right decision." The anxiety that comes with the possibility of having made a bad decision can lead to rationalization, the tendency to create additional reasons or justifications to support one's choices. A person who just spent too much money on a new car might decide that the new vehicle is much less likely to break down than his or her old car. This belief may or may not be true, but it would likely reduce dissonance and make the person feel better. Dissonance can also lead to confirmation bias, the denial of disconfirming evidence, and other ego defense mechanisms. Now you are in a position to appreciate this piece of humor from Punch, the British humour magazine from the issue of April 3, 1957 31 Q: What are banks for? A: To make money. Q: For the customers? A: For the banks. Q: Why doesn't bank advertising mention this? A: It would not be in good taste. But it is mentioned by implication in references to reserves of $249,000,000,000 or thereabouts. That is the money they have made. Q: Out of the customers? A: I suppose so. Q: They also mention Assets of $500,000,000,000 or thereabouts. Have they made that too? A: Not exactly. That is the money they use to make money. Q: I see. And they keep it in a safe somewhere? A: Not at all. They lend it to customers. Q: Then they haven't got it? A: No. Q: Then how is it Assets? A: They maintain that it would be if they got it back. Q: But they must have some money in a safe somewhere? A: Yes, usually $500,000,000,000 or thereabouts. This is called Liabilities. Q: But if they've got it, how can they be liable for it? A: Because it isn't theirs. Q: Then why do they have it? A: It has been lent to them by customers. Q: You mean customers lend banks money? A: In effect. They put money into their accounts, so it is really lent to the banks. Q: And what do the banks do with it? A: Lend it to other customers. Q: But you said that money they lent to other people was Assets? A: Yes. Q: Then Assets and Liabilities must be the same thing? A: You can't really say that. Q: But you've just said it! If I put $100 into my account the bank is liable to have to pay it back, so it's Liabilities. But they 23 of 29

go and lend it to someone else, and he is liable to have to pay it back, so it's Assets. It's the same $100 isn't it? A: Yes, but.... Q: Then it cancels out. It means, doesn't it, that banks haven't really any money at all? A: Theoretically...... Q: Never mind theoretically! And if they haven't any money, where do they get their Reserves of $249,000,000,000 or thereabouts?? A: I told you. That is the money they have made. Q: How? A: Well, when they lend your $100 to someone they charge him interest. Q: How much? A: It depends on the Bank Rate. Say five and a-half percent. That's their profit. Q: Why isn't it my profit? Isn't it my money? A: It's the theory of banking practice that......... Q: When I lend them my $100 why don't I charge them interest? A: You do. Q: You don't say. How much? A: It depends on the Bank Rate. Say a half percent. Q: Grasping of me, rather? A: But that's only if you're not going to draw the money out again. Q: But of course I'm going to draw the money out again! If I hadn't wanted to draw it out again I could have buried it in the garden! A: They wouldn't like you to draw it out again. Q: Why not? If I keep it there you say it's a Liability. Wouldn't they be glad if I reduced their Liabilities by removing it? A: No. Because if you remove it they can't lend it to anyone else. Q: But if I wanted to remove it they'd have to let me? A: Certainly. Q: But suppose they've already lent it to another customer? A: Then they'll let you have some other customer's money. Q: But suppose he wants his too....and they've already let me have it? A: You're being purposely obtuse. Q: I think I'm being acute. What if everyone wanted their money all at once? A: It's the theory of banking practice that they never would. Q: So what banks bank on, is not having to meet their commitments? A: I wouldn't say that. Q: Naturally. Well, if there's nothing else you think you can tell me....? A: Quite so. Now you can go off and open a banking account! Q: Just one last question. A: Of course. Q: Wouldn't I do better to go off and open up a bank? Of course, and that is just what we need to do! Charter a Common Good Bank and exercise our sovereignty. Then we can create a just abundance, heal the environment and assure that our most cherished values are reflected in our economy. In the mean time there is:

R Credits

TM

R Credits is a new local money system proposed to launch in Greenfield, MA in March 2012. R Credits combines features from successful alternative credit systems, adding technology innovations and procedures to ensure a secure, profitable experience for everyone. Participants will typically receive several thousand dollars a year in incentive credits. In this time of economic and environmental crisis, R Credits could even serve as the framework for a new democratic economic system that puts people and planet first -- a model easily adopted by individuals and businesses in any community, so that everyone can have healthy food, a home, healthcare, satisfying work, and a livable world. R Credits is sponsored by Common Good Finance, a Massachusetts-based nonprofit. Key Features Credit, not paper. Like a local currency system, but with computerized bookkeeping instead of paper currency. We call the credits R Credits to distinguish them from US dollars. 24 of 29

 Modern technology. Use simple cell phone texting or internet, to charge someone, to pay someone, or to exchange your R Credits for US Dollars or your US Dollars for R Credits. Incentives. There is no cost to join. Instead, when you join, you get some R Credits to spend, plus more every time you use the system: a rebate on any amount you pay and a bonus on any amount you receive. Get paid to participate! Democratic funding. Participating communities discuss and decide what new or old businesses to fund, to become sustainable and to meet everyone's basic needs -knowing that there is money available to fund those decisions. Then the community can make grants and loans of R Credits, to put people to work doing what needs to be done. How is it Different from other local currency or local credit systems Alternative currency systems that have failed, have failed principally for just one reason: some participants ended up with currency they could not use. That is extremely unlikely in the R Credits system, because: Capacity. Every participant will have plenty of places to spend, right from the beginning. Exchange. Participants can easily exchange any excess R Credits for US Dollars. Managed growth. We manage growth in a way that increases the opportunities for spending and exchange (it just gets better). Open door. Guaranteed, no-loss exit strategy, if you ever want to leave. Enormous upside. Huge financial incentives for both businesses and individuals to participate. Minimal downside. We do all the bookkeeping, so there is very little extra work for participants. Security The R Credits system will deter fraud by using many of the same technologies that banks use, including electronic photo identification, SMS confirmation, and user-customized security procedures. Why Greenfield We aim to launch the system in Greenfield because of its robust local economy with many locally owned businesses. Greenfield has a strong sense of community, an active sustainability movement, economic diversity, and many years of experience with local currency (Greenfield Dollars). To get involved or for more information, contact: Common Good Finance PO Box 21, Ashfield, MA 01330 413-628-3336 info@CommonGoodFinance.com

Appendix 1 The Bibliography: Ellen Brown: Web of Debt; Bernard Lietaer: Future of Money and Of Human Wealth; Stephen 25 of 29

Zarlenga: The Lost Science of Money and The American Monetary Act; Thomas Greco, Jr.: The End of Money and the Future of Civilization; E.C. Knuth: The Empire of The City; Richard Douthwaite: The Growth Imperative, Adrian Kuzminski: Fixing the System Edward Kelllog: A New Monetary System and many more. Videos: Paul Grignon: Money as Debt; Money as Debt II Promises Unleashed; Digital Coin, The Essence of Money a Medieval Tale; Bill Still: The Money Masters and The Secret of Oz; Alan Rosenblith: The Money Fix Chris Martenson: Crash Course, and many more. Appendix 2 Democracy, what we don't know and were never taught about democracy. If between 67% and 97% of us were opposed to the bailout of the too big to fail banks, and if only 20% of us were in favor of the Iraq war, how is it possible for our Government to ignore us? If we had a direct democracy would we govern more beneficently than our representatives do? Since we experience our democracy as continuously failing to live up to our expectations we need to examine our assumptions about it. When Lincoln coined the phrase government of, by and for the people, he was surely not referring to what we now endure. How did government of, by and for the special interests arise? Is it a defect of the people? Or is it a defect of our Constitution? The question of money creation was a big issue in Colonial times, but paper money issued by the Colonial Legislatures gave the colonies the needed money to develop their economy rapidly and with full employment. Because the Continentals issued by the Continental Congress had become practically worthless the Constitution called for issuing the money as gold and silver coin. Hamilton and Jefferson were bitterly opposed to each other over the proper role of government with Hamilton advocating a National Bank such as the Bank of England, and Jefferson suspicious of banking but without a coherent alternative plan. The bank was chartered, but Andrew Jackson saw the evils of the bank clearly and ran for President with the slogan Jackson and no Bank, but Jackson had no coherent alternative plan either and could only veto the rechartering of the bank. Lincoln's life was dedicated to the proposition that a democratically controlled government would provide the social context and infrastructure in which the people could thrive. It was clear to Lincoln that both Capital and Labor together create the commonwealth. During his political career he governed with a view to keeping the balance between the two. Rising standards of living are only possible if the wealth generated by capitalized human ingenuity and conscientious labor is distributed equitably, not equally, in society. The ideals embodied in Lincoln's understanding of the American spirit gave rise to populism in the period after the Civil War. Populism is the idea that the people can be trusted to govern themselves and that the wealth created by an industrious populous should be distributed by the democratic process. That this needed to be embodied in the monetary system itself was clear in each of the populist movements that developed, but how to do this was the subject of great controversy. The Greenbackers were clear that the Government should issue the money to serve the need of the people for a stable, reliable, circulating medium of exchange. This controversy was the main issue in politics until the chartering of the Federal Reserve in 1913. The fact that the Federal Reserve is a cartel of privately owned banks was obscured and the idea that the Federal Government was issuing the currency essentially ended the controversy. However, we are now blatantly confronted with the consequences of this deception. If we keep doing the same things over and over again expecting a different result, then, as Einstein pointed out, we are insane. But, 26 of 29

if we recognize the money power as the primary determining power, then we will understand how determining the monetary system is and opt for a common good monetary system. Without this essential reform or revolution consumerism will continue to destroy the planet and the middle class will be shrunk to practically nothing and the vast majority of us will live in perpetual debt and poverty. With a common good monetary system it will not take long until all our material needs are easily and sustainably taken care of and we can devote ourselves to creating the new paradigm culture. Appendix 3 The Transition from Common Law to Commercial Law: See THEY OWN IT ALL (Including You!) by Ronald MacDonald and Robert Rowan, MD The transition from common law to the UCC (Uniform Commercial Code) is ably described by Jordan Maxwell. There are numerous video interviews with Jordan Maxwell at video.google.com Appendix 4 Spiritual Science and the science of consciousness. Our consciousness is the supreme element in creation and so controlling our thoughts is the goal of the encroaching New World Order of the Banking Cartel. Rudolf Steiner and other anthroposophically inspired authors are my most reliable source for understanding our true nature. Rudolf Stiener's works on the Threefold Social Order and World Economy give a philosophical and spiritual basis for understanding how society and the economy could be! A good, brief introduction to this subject is provided in Gary Lamb's book Associative Economics, spiritual activity for the common good available from End Notes:

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1 http: //quotes.liberty-tree.ca/quotes_by/john+adams 2 Thomas Jefferson to John Taylor, Monticello, 28 May 1816. Ford 11:533 3Thomas Jefferson to John Wayles Eppes, Monticello, 24 June 1813. Ford 11:303. 4 John Kenneth Galbraith (1908- ), former professor of economics at Harvard, writing in 'Money: Whence it came, where it went' (1975). 5 http: //www.planetization.org/prosperity.htm This is a paraphrase from a radio address that Charles Binderup Congressman from Nebraska gave in 1941. John Twells, an historian, is the reputed source. The following quote from Ben Franklin's Autobiography substantiates the veracity of the story. From Part XXIV
About this time there was a cry among the people for more paper money, only fifteen thousand pounds being extant in the province, and that soon to be sunk. The wealthy inhabitants oppos'd any addition, being against all paper currency, from an apprehension that it would depreciate, as it had done in New England, to the prejudice of all creditors. We had discuss'd this point in our Junto, where I was on the side of an addition, being persuaded that the first small sum struck in 1723 had done much good by increasing the trade, employment, and number of inhabitants in the province, since I now saw all the old houses inhabited, and many new ones building; whereas I remembered well, that when I first walk'd about the streets of Philadelphia, eating my roll, I saw most of the houses in Walnut-street, between Second and Front streets, with bills on their doors, "To be let"; and many likewise in Chestnut-street and other streets, which made me then think the inhabitants of the city were deserting it one after another. Our debates possess'd me so fully of the subject, that I wrote and printed an anonymous pamphlet on it, entitled "The Nature and Necessity of a Paper Currency." It was well receiv'd by the common people in general; but the rich men dislik'd it, for it increas'd and strengthen'd the clamor for more money, and they happening to have no writers among them that were able to answer it, their opposition slacken'd, and the point was carried by a majority in the House. My friends there, who conceiv'd I had been of some service, thought fit to reward me by employing me in printing the money; a very profitable jobb and a great help to me. This was another advantage gain'd by my being able to write. The utility of this currency became by time and experience so evident as never afterwards to be much disputed; so that it grew soon to fifty-five thousand pounds, and in 1739 to eighty thousand pounds, since which it arose during war to upwards of three hundred and fifty thousand pounds, trade, building, and inhabitants all the while increasing, till I now think there are limits beyond which the quantity may be hurtful. and the pamphlet on The Nature and Necessity of a Paper Currency can be found here: http: //etext.lib.virginia.edu/etcbin/toccernew2?id=FraMode.sgm&images=images/modeng&data=/texts/english/modeng/parsed&tag=public&part=all

6 http: //www.apfn.org/Mind_Control/money/root.htm 7 http: //en.wikipedia.org/wiki/Pujo_Committee The deception around the establishment of the Federal Reserve is very difficult to believe. The money trust, or money power, wrote the Federal Reserve Act in secret and it got passed because they pretended to oppose it and it was billed as the taking over of the money power by the Federal Government. 8 http: //quotes.liberty-tree.ca/quotes_by/charles+a.+lindbergh,+sr . 9 http: //en.wikipedia.org/wiki/The_Economic_Consequences_of_the_Peace 10 http: //en.wikipedia.org/wiki/Josiah_Stamp,_1st_Baron_Stamp 11 http: //en.wikipedia.org/wiki/Louis_Thomas_McFadden 12 I ran across this statistic but have not been able to find it again. It is, however, obvious. 13 http: //www.brainyquote.com/quotes/quotes/m/mayeramsch170274.html 14 http: //www.huffingtonpost.com/2009/04/16/elizabeth-warren-makes-jo_n_187635.html 15 http: //www.bloomberg.com/apps/news?pid=20601087&sid=apx7XNLnZZlc 16 Fiat means let it be so or so it is A fiat currency is a fiat of the law or the soverign. Because the sovereign decrees it, it is so. 17 see iii There is a lot of obfuscation about this. Shays rebellion according to contemporary accounts, for example, was about the inadequate money supply, and the resulting inability of people to pay their debts. This was a well known problem in those days. 18 Web of Debt by Ellen Brown pages 43 to 45 including how the British Bankers used speculation (similar to naked short sales) to make the Continentals worthless. 19 There is no reliable source for this quote. The leading author on Lincoln's economic views, Gabor Borrit, who wrote Lincoln and the Economics of the American Dream has reviewed it and declared that it accurately represents Lincoln's views. 20 Ellen Brown and many others use these quotes. In Web of Debt it is explained on pages 91 to 93 21 There are many sources for this. I like History Matters: http: //historymatters.gmu.edu/d/5354/ 22 This article can be downloaded as a pdf from the NY Times website: http: //query.nytimes.com/mem/archivefree/pdf?_r=1&res=9C04E0D7103EEE3ABC4E53DFB467838A639EDE What I found interesting is that only when you extract the quoted parts do you get the full impact. The article tilts the whole issue towards whether or not Henry Ford should lease Muscle Shoals when it is completed because he would be able to run it better than a Government Agency!

23 I can't find a reliable source for this quote. However, it is well known just because the idea is sound. 24 Market Money is beautifully explained in Paul Grignon's video: The Essence of Money, A Medieval Tale which can be found at www.digitalcoin.info 25 http: //en.wikipedia.org/wiki/Economic_ideology 26 Historians who substantiate this include: Stephen Zarlenga in the Lost Science of Money and Antony Sutton in WESTERN TECHNOLOGY AND SOVIET ECONOMIC DEVELOPMENT and their sources. 27 Elizabeth Warren's book The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke lays it out clearly: We are increasingly worse off through no fault of our own. The cost of interest is impoverishing us all! 28 http: //www.rayservers.com/images/ModernMoneyMechanics.pdf Print it out and read it! 29 See David Korten's book Agenda for a New Economy, from Phantom Wealth to Real Wealth, in which there are many illustrations of the absurdity of our confusion about money and wealth. 30 http: //www.monetary.org/ The Lost Science of Money by Stephen Zarlenga 31 http: //www.institutionaladvisors.com/pdf/081024-PRIMER_ON_FRACTIONAL_RESERVE_BANKING.pdf