Financial Historian Ed Griffin on the Economic Crisis

[CrackSmokeRepublican]

http://www.thedailybell.com/618/Ed-Grif ... Elite.html

Guest Interview
11/29/2009 - with Scott Smith
   
Legendary Financial Historian Ed Griffin on the Economic Crisis, the Monetary Elite and the Future of the Internet

G. Edward Griffin

The editors of the Daily Bell are pleased to publish an exclusive follow-up interview with legendary hard-money historian G. Edward Griffin who has much to say about the economic crisis, the mood of the monetary elite and the effect of the Internet on freedom.

Introduction: Mr. Griffin is a distinguished film producer, author and political lecturer. He is the founder of Freedom Force International, a libertarian-oriented activist network focused on advancing individual freedom. First released in 1994, Mr. Griffin's best-selling financial book, The Creature from Jekyll Island, is a no-holds-barred look into the inner workings of the Federal Reserve banking system, or cartel if you will. Mr. Griffin peels back the layers of obstruction to rational analysis and leads the reader on a wonderfully researched, although disturbing, journey from the very beginning, when the Fed was still in the planning stages, up to the present, where it is now struggling to survive. For many years, the editors of the Daily Bell have been avid readers of Mr. Griffin's tremendous literary contributions on free markets and personal liberty. His insights are especially noteworthy given the validity of his vision and the exciting and troublesome nature of the times in which we live.

Daily Bell: Has the stimulus helped? Why or why not?

Griffin: Has the stimulus helped? I guess the question is has the stimulus helped whom? Or What? The general idea is that the stimulus is supposed to stimulate the American economy and help the American people and in that I don't believe that there is any reason to think that it has helped at all. I don't think it was really designed to do that at all. It was designed to be sold that way but I don't think that anyone in Washington thought that it would actually accomplish the end objective. Now I suppose that some people did think so, I would have to backtrack on that, there are some collectivists that believe the government can solve all problems, that the government can take everything from the citizens and redistribute it back to them in a more efficient manner. There are people like that out there and they thought the stimulus package would help. Surely everybody understands that the money that is being spent is coming out of the pockets of the very people it is supposed to help.

Daily Bell: From the central banking mechanism?

Griffin: Yes, the government doesn't have this money. The government is spending this money but they don't have this money, and the paradox there is that they are not collecting it from taxes but they are just creating it out of nothing. They are using the Federal Reserve mechanism to create this money out of nothing, push it into the economy and then that results in inflation. The cost of it is born by everybody but it is usually born mostly by the people at the bottom of the economic scale who will feel the effects of inflation the most.

Daily Bell: Modern governments are supposed to take care of the poor, but often it doesn't work that way.

Griffin: The very wealthy don't suffer too much from the effects of inflation and the upper middle class get by OK, but the bottom part of the middle class and those who are on limited incomes have a real tough time with inflation. So I am saying the cost of all these stimulus packages are falling on the very people who are supposedly to be helped and not only that, the benefit is not going to those people at all but to the politically favored class, those who are in government jobs or government contracts with the government. It is going to the banks, going to the insurance companies, the big corporations - all who have strong lobbying influence with Washington. The money is coming from the middle and lower class and going to the politically favored class. So is it helping? It is helping the politically favored class a lot, it is helping the politicians a lot because they can posture and grandstand and say we are doing something, we are taking charge here. So it is helping them. But as for helping the economy or the people at large, it is a miserable failure.

Daily Bell: Are we headed toward price inflation?

Griffin: I think we are going to see some continued deflation in the economy, particularly in the bubble sectors. These markets had a long way to contract and I don't think they are finished. However, it is inevitable that we are going to see price inflation and lots of it. Probably hyper-inflation because the only thing these people in Washington know is how to print more money which almost inevitably leads to higher prices.

Daily Bell: Isn't price inflation already in the system?

Griffin: Of course it is, particularly in cost of living sectors - food, education and healthcare. Things people have to deal with every day. We are already are seeing price inflation there.

Daily Bell: Price inflation, which inevitably results from the printing of money. ...

Griffin: What is interesting when you have a complete understanding about this, is to realize that while they are creating tremendous amounts of money out of nothing and pouring it into the economy through the politically favored class, as I mentioned earlier, at the same time a tremendous amount of money is dropping out of the system at the bottom because of the collapse of real estate values, the loss of savings, the writing off of bad loans, mortgages or writing off a $20k or $30k credit card bill or whatever the debt is. And eventually they go into bankruptcy court and they are cleared of that debt, that money literally goes out of existence.

Daily Bell: So inflation - which is actually the quantity of money - is evening out for the moment?

Griffin: With the fiat money system, money comes in and out of existence and people sometimes forget that fact. So in these economic downturn times, a lot of money is disappearing and at the same time is appearing at the top. The thing to keep your eye on is where the money is going out of the system. It's coming out of the middle class. These are the people that have lost their savings, have lost the equity in their homes. They have lost all the money that they thought they had in the way of assets, a lot of it anyway. So we see there is money going out and at the same time there is money coming in. It is a transfer of wealth. The wealthy, because of the political connections, are making more and more money and the middle class is literally being squeezed. These guys at the top hope to squeeze these middle guys out of existence.

Daily Bell: Is the power elite running scared?

Griffin: I wouldn't say they are running scared. I think they are cautious. I think things are unfolding pretty much the way they had anticipated all along. I think these people are smart enough to realize that as we come closer and closer to their New World Order, as they like to call it, the system is becoming more and more a command economy rather than a free market.

Daily Bell: But aren't people waking up?

Griffin: There is a lot of upheaval going on. I think there is anticipation that there is a lot of waking up going on. But I think they have been preparing for that. I think they are cautious, but I think they fully expect to contain that or possibly turn it to their advantage. For example, if they could encourage rebellion, revolts and riots, that would provide the excuse for martial law. I think the motivation behind their equipping police forces and national guard units with crowd control weapons and the reason they have been building these massive FEMA concentration camps all around the country, is their anticipation of the need for a final crackdown.

Daily Bell: Has the Internet contributed to elite setbacks?

Griffin: I think the Internet has been the most powerful force to set back the plans of the power elite. They hate the Internet, they hate the free exchange of information. You can see the impact all around the world. The totalitarian systems are moving heaven and earth in order to regulate and restrict the free use of the Internet. They want to control it. They can control it. And they are working very hard as we speak to maneuver the legislation so that they will control it.

Daily Bell: How are they going about it?

Griffin: They are trying to sell it to the average person as a good move for the public. They are trying to convince people that if the government doesn't control the Internet then we will have pornography, people will have their privacy stolen, children will be abused. A lot of people don't really understand the real issues. They say "oh yeah, naturally we need more and more regulation on the Internet."

Daily Bell: This is being done independently by governments?

Griffin: Actually, there is a movement afoot for the United Nations to control the Internet. The idea is that international control would be fairer than what we've got now, which is a good deal of American control. Of course, most countries don't make any pretense of respecting individual rights or free-speech. They are totalitarian in nature. The whole world is filled with dictatorships of one kind or another, and these people have no respect for human rights or freedom of speech. You can be sure that if the United Nations winds up in control that the free exchange of information that the whole thing will come to a shuttering stop!

Daily Bell: Not a pleasant thought. But meanwhile, the power elite has other things to occupy itself with. Is it fair to say that the fiat money system is broken beyond repair?

Griffin: No, the fiat money system is all that the world has right now. Of course, it is not working well at all and thus there has been talk of a new monetary system - one that might possibly be backed a little bit by gold or silver. But that's what they always say to sell it in the early stages. If you look at the people who are making these statements, the Western world leaders, they are enemies of gold and silver. They love fiat money. They want to control it because it's a means of strengthening their hand over the people. Fiat money is not dead by any means.

Daily Bell: Is there more unrest in the West than the mainstream media suggests?

Griffin: Good question, I don't know that I am qualified to answer that. My contacts indicate that there is a lot of unrest when you get out beyond informed groups to the people who make up the bulk of the population. But it's unrest that is not knowledgeable; it's not based on information.

Daily Bell: What is the trigger, then?

Griffin: It's based on emotion and envy and anger and I am afraid that that kind of unrest can be used to bring about the very opposite of what we need in this world. If you can manipulate the mobs into being angry, say for example, at capitalism, then you can end up with something even worse.

Daily Bell: Yes, that's why change has to be non-violent.

Griffin: And it has to be knowledgeable. It's not knowledgeable to say the banks are failing and therefore capitalism has failed, so let's try socialism. What's left out of that argument is that the banks are not functioning within a free-market system. The banks in the world today are a prime example of collectivism. They are in bed with the government. They couldn't exist without government favoritism and government monopoly. The banks and the government are practically one in the same. That's not capitalism, that's not free enterprise competition. But the masses have been told that that is capitalism. So when the collectivist system goes belly up, as it periodically does, then those who are misled can get angry at capitalism, which is the wrong target. I worry about that kind of rising resentment and anger in the world because it is not based on facts.

Daily Bell: Yet understanding of free-markets has taken off in the last decade, thanks to the Internet in large part.

Griffin: Funny, I am thinking that there are two parts in my brain fighting against each other at the moment. On the one hand I want to say something very positive and encouraging because there certainly are strong signs of a growing movement for the free market. But when you look at who is still in charge of the world's governments and institutions, it's still a very small component of the larger scene.

Daily Bell: But it is growing? ...

Griffin: Yes, it is definitely growing and I believe it has a solid base to it. In fact, I get a great deal of encouragement from that. We just have to keep the fire under it and I think as more and more people become upset with the collapse going on around them, they will honestly start looking for a new way. And thanks to the Internet, many are starting to realize that we haven't had free-enterprise capitalism, we haven't had free markets for many years. I'm encouraged by that, but we still have a long way to go.

Daily Bell: We compared the Internet to the Gutenberg press and said the results would be similar. Do you think so?

Griffin: I think that is a good analogy. The Gutenberg press made information available to the masses and the Internet has done the same. Good analogy, yes.

Daily Bell: We've spoken about some general threats to the freedom of the Internet. Will the current American administration be able to crack down on the Internet and censor its messages about free-markets and freedom in general?

Griffin: The current administration can do anything it wants to do. That is the answer to the question. They have the political power, the military power and the economic power. They own the economy and they control the military. And the media goes along with everything they want to do. I think they want a crack down, and will try, but they are going to need some kind of an excuse. They are going to need some kind of a major event to justify it.

Daily Bell: Will Ron Paul and his free-market message have an increasing impact on American politics?

Griffin: I believe he will, but I don't know if it will be because of his personal involvement or this thing that we might call the Ron Paul phenomenon. Ron Paul generated this phenomenon because of his astoundingly excellent position on so many policies and because he ran as a candidate of a major political party which gave him visibility, which he would never have had, particularly with young people. Once that is started, it can't be stopped really. Once the bell is rung it can't be un-rung. So I think, even if Ron Paul is not personally involved in any more political movements, that the Ron Paul phenomenon is going to continue to grow.

Daily Bell: We think the conservative movement is desperate to co-opt the libertarian message and has launched a number of artificial candidates to do so including notably Sarah Palin. Agree?

Griffin: I agree that that is a strategy they have considered and would execute if they could. When it comes to particular candidates, I don't know enough about them. Sarah Palin is very hard to pin down. I don't know what her political philosophy is. And that worries me, because if someone is offering themselves for leadership, especially in these troubled times, they have to stand up and say what it is they believe in. I am talking about real principles and not just in terms of whether we should or shouldn't drill oil. That's an issue, and an interesting issue, but what are the principles, what is the ideology, what is the yardstick that will be used, the guidelines that will be used to make all the decisions that come down the line.

Daily Bell: She comes off as free-market oriented in some ways but not in others. Most notably her ongoing support for the military industrial complex is problematic.

Griffin: I don't know what her philosophy is. But I have a feeling that what you said is absolutely correct, that they are going to package her as a quote "conservative" whatever that means. Certainly, they are going to package her as a constructive alternative to Obama. Yet when it comes to the real issues like the loss of American sovereignty, the abolition of the Federal Reserve System, important issues like that, we don't know where she stands.

Daily Bell: We think the American intel establishment is launching more and more conspiratorial and pro-war Internet sites - ones that nonetheless feature free-market rhetoric - in order to confuse the public. Agree?

Griffin: I am not aware of them but it sounds like something they should do. If I was running their strategy, that is exactly what I would do. I don't know what sites you would be referring to but I would expect that to be the case.

Daily Bell: Will the American establishment media ever get to the bottom of 9/11?

Griffin: The American establishment media will never get to the bottom of 9/11 because they are controlled by the same financial and political forces that seem in some sense responsible for 9/11. I am talking about that cluster of personalities on the Council of Foreign Relations and the people that circle around them. They are the ones that are really calling the shots, not only in the government, but also in the media, educational systems, foundations, etc. The media is as much a part of that group as the government. So I don't expect to see the media break step with the official position of the government.

Daily Bell: Why did John Farmer, the 9/11 Commission lead litigator, recently come out with a book that basically accused the entire American military, political and industrial structure of lying about what happened on that terrible day?

Griffin: I don't know, I have not read the book but I am guessing that it might be a kind of decoy to lead people away from the real issue. I suspect that it is part of a decoy. Make a half confession instead of a fuller one.

Daily Bell: Did you ever believe this sort of free-market movement would exist - as it evidently does - within your lifetime?

Griffin: I never questioned whether there would be a free market movement - I was determined to be part of it. That is much of the focus of my work. Yes I did expect to see it.

Daily Bell: Can you list some of your own notable accomplishments - outside of writing one of the best books ever on the Federal Reserve - in aiding this trend?

Griffin: As far as my own work is concerned, others would be better to evaluate how effective that was. I just keep chugging away as best I can.

Daily Bell: What do you believe will happen within the next ten years? Are you optimistic for free markets and freedom in the West and in particular in America?

Griffin: I divide my view into the short view of history and the long view. I have to be honest and say in the short run that I am very pessimistic. I believe that the forces that brought us to this situation are firmly in control of the systems of the world right now. I don't think we are going to see a turn around in the short term.

Daily Bell: You are speaking of governmental forces?

Griffin: No, I'm not just talking about the political structures, but about the media centers and the educational systems and the labor unions, the church organizations. All the great power centers where people have their leaders and derive their opinions. Those are now all firmly in the hands of collectivists who have this single goal of establishing a new world order based on the model of collectivism.

Daily Bell: You see it as very pervasive.

Griffin: They are in charge. Anyone who thinks we are going to turn that around quickly, well, I don't think he or she is being realistic. But that does not mean that the long view cannot be favorable. I'm much more optimistic in the longer term. There's no way to stop this thing in my view. They can stop some of us, but they can't stop all of us. The ideas cannot be stopped. Once people understand the truth, they are not ever going to easily forget it.

Daily Bell: You've done a great deal to help with that effort.

Griffin: All of us together are building a movement where an understanding of free-enterprise and free-markets is reaching the point of critical mass. People are passing the word. Books are being written. DVD's are being distributed. Outside of the mainstream media, the Internet is having a powerful impact. The overall flow of information is pretty strong right now. It is going to take about two generations, in my opinion, but in the long run I see total victory for free markets and for personal freedom. I feel really good about that.

Daily Bell: From our point of view, the Middle Eastern wars are intended to spread Western-style collectivist democracy to the Islamic world. Has the West stumbled in its war against the Muslim religion (failure in Afghanistan, Iraq, Pakistan, etc.)?

Griffin: Have they stumbled? In my view, the conflict between the Western world and Islam is largely manufactured. There is no question that there are extreme groups within Islam, but my own research leads me to the conclusion that those are the very groups that have been fronted, aided and abetted by forces within America because they wanted to create an enemy - a dreaded foe to justify all the other schemes.

Daily Bell: The BBC, in a program last year came to a similar conclusion.

Griffin: Without an enemy, they cannot fight a war. Without a war, they cannot justify being in the Middle East. If they are not in the Middle East, they can't control the oil and on and on you go.

Daily Bell: So ... it's at least partially manufactured?

Griffin: The war against Islam is manufactured and is actually a war that need not be. Did they fumble the war? No they created it! They created it and it is just a meme. They don't want to win the war! They want to fight the war for ten years, twenty years, thirty years. They are not fumbling it. It is exactly what they want. It is not a question of winning or losing, it's a question of just having it, prolonging it and using it as a means of scaring the daylights out of the American people and conditioning them to accept the loss of their freedom at home.

Daily Bell: Homeland Security is a dangerous institution in our opinion and one of the prime outcomes of 9/11. Do you see it being rolled back?

Griffin: I do not see it being rolled back under the present regime. It is not there because the American people wanted it, it is there because rulers wanted it and we still have the same rulers. I don't see any reason why they would roll it back. They might try to tidy it up a little bit, so far as public relations are concerned. But I would be very surprised if they cut its budget, cut its staff, cut its powers or anything like that. I think it is going to continue to expand, all aspects of it.

Daily Bell: We had a polite but public argument with the savvy Ellen Brown. Can you give us a further response to Ellen Brown's (Brownian) perspective on nationalizing banks since they, rather than the Federal Reserve, are responsible in her view for banking abuses?

Griffin: Well I am not aware of that debate, but I am certainly able to address the issue of nationalizing banks. There is no reason in my mind for the banking system, or for that matter, the automobile industry, the motion picture industry, housing or any other part of American life to be run by the government. I don't see any reason for the hospitals or medical clinics to be run by the government either.

Daily Bell: Good point.

Griffin: The idea that whenever there is a problem the solution is for the government to go in and take control is one of the most absurd and childish concepts I have ever heard of. The idea that the government can do anything better than the free market is just based on complete absence of understanding how the free market works. The only thing I think the government can do better than anybody else is to fight a war. The only thing a government can do better is to kill and destroy, and that is what it is good at. If war is used to kill and destroy in defense of a nation, in defense but not as an aggressive act, and it is used to defend the lives, liberty and property of its citizens then war performs a proper function, in my view.

Daily Bell: So you see a need for some kind of limited government, practically speaking.

Griffin: It is tragic that we have to defend ourselves. But history shows if you cannot defend yourself then you become a slave to someone who moves in and takes over. So we need to have the killing machine, but that's about all.

Daily Bell: But not the banking system?

Griffin: The idea that government should be running the banks is absurd. The American government has been in the banking business since 1913 when the Fed was founded. The solution is not to get more into the banking business but to get the government out of it completely. So I would say no, let's get the government out of the banks completely and then make the banks follow the rules and regulations that any other business must follow. Give them no favoritism, no subsidy, no bailouts. Make them honor their contracts and if they fail then they fail. Let new banks come into existence.

Daily Bell: How long has gold and silver been used as money? We think silver anyway is a substance that has been used in commerce for up to 10,000 years of human history, not 2,000 as certain monetary authorities suggest.

Griffin: I would have to get my notes out on exact dates but it doesn't really make any difference if it's been 2,000 years or 10,000 years. The real issue is not how long but how well it has performed in that function. When you look at the historical record, there is nothing that has done as well as gold or silver as a medium of exchange because it has all of the essential qualities required of money. It is not perishable, it's divisible, it has great value and it can be precisely measured. People have used just about everything for a medium of exchange but nothing has worked as well as gold and silver for thousands of years. The record is clear on it. That is what history has chosen over and over again. Why do we have to go looking around for something else? I don't understand that.

Daily Bell: Do you have any other comments to make regarding where we are at this point in the 2000s rather unique history?

Griffin: The only comment I would like to make is that it is an exciting time in which to live. I am glad I am living at this time. I am glad because, for me or anybody else who is a free-market thinking person and one who cares about the future, it gives us an opportunity to make a difference in the world. I think it is a wonderful time to be alive.

Daily Bell: Thank you, Ed. You continue to make a huge difference. It is always a pleasure and an honor to speak to a free-market legend in his own lifetime!


After Thoughts with Scott Smith

Scott SmithWhat can we say about this remarkable man and the remarkable and honest answers he has provided us? Ed Griffin has fought for freedom throughout his life and his famous book on the Federal Reserve has in one way or another inspired millions to question their assumptions about money and the reality of their lives in modern society.

Ed Griffin is an achiever for freedom and he has continuously made an effort to advance its cause. We don't have any explanation for what makes Ed Griffin go. He obviously does what he does because he has to do it. We're just glad he's around.

If we had any quibble with this interview (how can we, really?) it would be in the area of pessimism - even short-term pessimism. We know Ed was just explaining his viewpoint as honestly as possible, but we think, generally, that pessimism probably expends negative energy that would be better spent doing positive things.

And Ed, despite his views about the elite and their controlling ways, has quite obviously never let pessimism slow him down. He went out and wrote a tremendous book (one of a number he has written) that literally changed people's lives and perceptions of their culture.

Additionally, Ed is very active in the peaceful fight for freedom in America. He may be pessimistic, short term, but he is the most active pessimist we know. Every day he gets up and does his part, his share, to fight collectivism and to try to gain back some ground for the American Constitution.

For us, Ed is a great inspiration - as a leader, as a fighter in a peaceful revolution of ideas and as a person who has created a life based on an inspiring and important belief structure that he obviously built up on his own. Ed, by the way, lived much of his life in a pre-Internet era. Much of his adult work was conducted pre-Internet, which makes it all the more noteworthy.

For us, of course, as we have often reported, the Internet is something of a game-changer. We look at what the Internet has allowed people to accomplish in terms of supporting freedom, and we begin to believe that the changes that have been made by the Internet are "already in the pipeline."

Yes people's minds have already been changed. Now, Ed Griffin believes it may take another two generations to show overwhelming results. But maybe not. There is, as Ed himself agrees, a foundational freedom movement in America, and we see one growing in Britain as well. There are setbacks in all things, and cyclical turnings as well. But people like Ed Griffin and Ron Paul inform us through their actions and intent that there are always two sides at work - and at least two stories being told simultaneously. And maybe, ironically, Ed's own efforts may contribute to speeding things up. Freedom, real freedom, may not take two generations to achieve.

We want to end by observing that Ed Griffin-a man who certainly ought to know - sees many positives in the world today and in the Internet as well. What we'll take away from this interview is the energy it exudes, and the excitement that Ed obviously has about the future of freedom, even as he acknowledges, realistically, the challenges ahead.

Thanks again, Mr. Griffin, for all you've done and have yet to do.

Interviews and after-thoughts may include the contributions of several Daily Bell editors and writers.

[Christopher Marlowe]

Daily Bell: We had a polite but public argument with the savvy Ellen Brown. Can you give us a further response to Ellen Brown's (Brownian) perspective on nationalizing banks since they, rather than the Federal Reserve, are responsible in her view for banking abuses?

Griffin: Well I am not aware of that debate, but I am certainly able to address the issue of nationalizing banks. There is no reason in my mind for the banking system, or for that matter, the automobile industry, the motion picture industry, housing or any other part of American life to be run by the government. I don't see any reason for the hospitals or medical clinics to be run by the government either.

Daily Bell: Good point.

Good Point? He doesn't see any reason for the banking system or health care to be run by the government is a POINT?  
"I lost my socks. Can you see them?"
"No, I can't see them anywhere."
"Good POINT!"
This guy didn't make a point. He just ignored all of Ellen Brown's research. That is probably the best way to deal with Brown if you don't agree with her because IMHO her arguments are very solid.

Here are the pertinent parts of the interview DB did with Ellen Brown:

Daily Bell: Are you a free-market economist or something else?

Brown: I believe in free markets, but I don't believe we have them today. Virtually every market now is manipulated and controlled. We lost our free markets when we gave away the power to create money to a private banking elite. They got their power through sleight of hand, and it can be reversed only by reversing the sleight of hand. Ironically, to get back our free markets, we need some government intervention. The economy has been captured by thieves, and we need some rules and regulations to put the genie back in the bottle.

Daily Bell: What's wrong with a gold or silver monetary system?

Brown: To answer that question properly will take more than a few sentences, but I'll try to be succinct. There are three ways a precious metal system could be set up: (1) a "gold-backed" fiat currency, of the sort we had until 1933 domestically and until 1971 internationally; (2) 100% gold coins, as Ed Griffin recommends; or (3) gold, silver and anything else trading freely with dollars, as recommended by Ron Paul.

The first alternative failed historically and doesn't work mathematically. Nixon had to take the dollar off the gold standard internationally after DeGaulle traded in his dollars for gold and the British then tried to trade in theirs, and the U.S. was about to run out of gold. In a "fractional reserve" system, only a fraction of the gold necessary to cash in all the dollars "backed" by gold is actually held in the banks' vaults. When people figure that out, you get runs on the banks and the banks have to close their doors. Roosevelt was faced with the same problem. People had panicked and were trading in their dollars for gold at the banks. The dollar was then 40% backed by gold, so whenever anyone cashed in $2 in paper money, $3 in loans had to be called in. The result was a radical collapse in the money supply.

Option #2, an all-gold currency, won't work for a number of reasons, but I'll just mention one: where are you going to get the gold? To be fair, the government would have to swap all the dollars in the money supply for gold. Assume a $13 trillion money supply (M3) and that there is $4 trillion worth of gold in the world (per the last report I saw). Even if you could acquire every penny's worth of gold, you'd have to revalue the gold so that it was worth $3000/ounce. Goldbugs say that's doable, but here's my question: how are you going to get the gold? What are you going to buy it with? Your paper dollars are going to be worthless. What Indian woman wearing that gold around her neck is going to be foolish enough to trade it for your paper dollars?

Ed Griffin would just divide the outstanding money supply by the gold in Fort Knox, but we don't know if there's any gold left in Fort Knox, and even assuming there is, the dollar value per ounce is going to be so far from anything resembling the real market value of gold that tying the dollar to gold will lose all meaning. If you want a fixed money supply, why not just have Congress order up X number of dollars, forbid any more to be issued, and make it illegal for banks to create credit on their books? Let them lend what they have and no more. Even that won't work though; you'll quickly degenerate into recession or depression, because there won't be enough money for innovation, development and the like. The ability to create and extend credit is a good thing and is necessary to a thriving economy. It's just a question of who gets to create it, private banks (which then proceed to charge interest on it that they siphon off the top as profits) or public banks, drawing on the "full faith and credit of the United States" because they are the United States and can return the profits to the United States, maintaining a mathematically sound system?

This is where an interviewer might actually question/debate Ellen Brown's take on private banks instead of just dismissing her idea behind her back.
I agree with Ellen. Giving private banks control of the money supply brought us to where we are right now. When banks loan money on a fractional reserve basis, they are creating money out of thin air.  Therefore banks create money. Should the money supply be controlled by the government or by private banks? That is a no-brainer for me.

The third idea - allowing people to trade in any currency they want - doesn't solve anything and just creates new problems. What's the exchange rate going to be between these various domestic currencies, and who is going to set it? Are you going to allow shortselling between currencies, derivative bets, etc.? If you have silver and gold coins trading together, what happens if gold goes up in value relative to silver? Will you have to change the face value of the coins? They could be left unstamped, but then you won't really have coins; you'll just have round gold bars. Then why not just keep your gold bars and sell them for paper dollars as needed? If the paper dollars lose value, as goldbugs are sure they will, the gold bars will fetch more dollars when sold, so value will have been preserved just as it would have been if the gold were actually turned into gold coins.

Daily Bell: You are somewhat cynical about government, yet your solutions feature government involvement. Can government really be trusted to do the right thing?

Brown: I have faith in the sort of government "of the people, by the people, for the people" described by Abraham Lincoln; but we don't have that now. What we have is government controlled by a few giant corporations, and they got their power by acquiring the power to create the national money supply. "Allow me to issue and control a nation's currency," Amschel Mayer Rothschild allegedly said in the 18th century, "and I care not who makes its laws." That statement may be apocryphal, but that is how they did it, and that is the power we have to get back if we want a just and trustworthy government that represents people rather than wealthy corporations.

Daily Bell: Do you believe in a business cycle - and that central banks aggravate it by printing too much money?

Brown: We had obvious business cycles in the 19th century when we were on the gold standard. Banks would issue banknotes that were many multiples of the gold they held in their vaults, until the paper money supply so far outstripped its backing that people realized the banks could not make good on all their gold-backed notes and there would be runs on the banks. "Fiat money" was not the problem though. The whole system was a ruse. The gold backing allowed private bankers to create paper money on a printing press and lend it at interest, pretending it represented gold the bankers did not really have in their vaults. Privately-issued paper money that is only partially backed by precious metals is a form of counterfeiting whether the sums are prudently managed or not.

Daily Bell: Was central banking over-printing of money the proximate cause of the economic crisis?

Brown: No. Alan Greenspan did lower interest rates to ridiculously low levels in 2001, precipitating the housing bubble that precipitated the current crisis; and he gave his blessing to derivatives, which allowed banks to move loans off their books, package them up, and sell them to investors, making room on their books for more loans and fanning the housing bubble. But it wasn't the central bank that over-printed money. It was the commercial banks, and of course they don't actually "print" it. They just create it as accounting entries on their books. The "crisis" came when there was a sudden shift in accounting rules, from "mark to fantasy" to "mark to market". The idea was to rein in the over exuberance of the banks; but the banks were just doing what they had to do to keep the Ponzi scheme going: create ever more loans. The real cause of the crisis was the Ponzi scheme itself: it just ran out of its food source.

Daily Bell: What are the best investments to make throughout the business cycle, and do they change over time?

Brown: They change over time, and because markets are so heavily manipulated, you can't really know what they are unless you're an insider. The rest of us just have to pay very close attention and ride the roller coaster. A case in point was a year ago, when gold was about to break through $1000, oil was hovering near $150/barrel, bank stocks were plummeting, and so was the dollar. Suddenly in July, everything miraculously reversed - the dollar and bank stocks shot up, and gold and oil plunged. What happened? The Japanese central bank later admitted in its local paper that the central banks had colluded to manipulate the markets.

Daily Bell: What do you think of the current economic crisis. Are Western countries handling it well?

Brown: Yes and no. The credit system has collapsed and Western central banks are trying to pump it back up with "quantitative easing," which is a better approach than President Hoover took when he tried to tighten the government's belt and "balance the budget" in the early 1930s. But bailing out the banks is the wrong approach. Governments should be using quantitative easing (essentially money-printing) to build infrastructure and pay the government's bills rather than trying to clean up the toxic books of failed banks. The problem is that the central banks are there to serve the banking system, not the people. We need truly national central banks. England and Canada technically own their central banks, but their governments still borrow from private banks. They don't use their central banks as if they owned them. China, Malaysia, and South Korea do; and they're faring quite well these days.

Daily Bell: Do you believe in the bailouts taking place in America?

Brown: No. We've been extorted into them. We've been made to believe the only way we can save our credit system is to spend our hard-earned taxpayer money to save the banks that got us into the mess, but that's not true. We can set up our own public credit system and let the private parasitic cartel fend for itself. They made billions in the free market; let them go down in the free market.

Daily Bell: Can you explain the genesis of the financial crisis?

Brown: Taking the long view, it's the end of a 300 year Ponzi scheme. Virtually all of our money is created by banks as loans; but banks create only the principal, not the interest necessary to pay their loans back. More is always owed back than is created in the first place, and new borrowers must continually be found to take out new loans to create the money to pay this extra interest. After 300 years, the whole world has been locked in debt, and the parasitic pyramid has run out of its food source.

All sorts of scams and schemes were devised to plunder the last dollar out of borrowers - securitization of subprime mortgages to move them off the banks' books and make room for more, derivatives to supposedly eliminate the risk of subprime default and induce investors to buy, etc. But the schemes have been exposed, and the "shadow lenders" - the investors induced to buy these bundles of subprime debt - have gone away and they aren't coming back any time soon.

The shadow lenders made up $10 trillion worth of the mortgage market. Virtually all of our money consists of credit (or debt), and a big chunk of this credit has disappeared. The money supply is collapsing, and that is what has caused the financial crisis. The solution is to put money back into the system; but the banks can't do it, because the Bank for International Settlements has imposed a tourniquet on lending with the Basel Accords.

We need to set up our own public banks, which cannot run short of "the full faith and credit of the United States" because they ARE the United States (or whatever local government is setting them up). In the U.S., we should nationalize the Federal Reserve and let it operate like a real government-owned bank, issuing money and credit on behalf of the public for infrastructure and other government expenditures. States could also set up their own credit mechanisms by setting up their own banks.

Daily Bell: Do you believe that some of your ideas will be taken up officially?

Brown: I keep trying, knocking at any doors I see; but it's a slow-moving machine. The first step is mass education and popular understanding.

Daily Bell: Have you heard from Wall Street about your ideas?

Brown: No.

Daily Bell: Are you at all worried about the reaction to your ideas?

Brown: I try to suggest solutions that are good for everyone. I think the private banking business has actually come to the end of the line. They're scrambling desperately to hold it all together, but there's not much more they can do. The whole multi-trillion dollar derivatives edifice was constructed in an attempt to bring business back that the banks were losing to their competitor non-bank institutions, but it didn't work in the end. I think the bankers might be relieved to pass the baton. Not that they want to lose their existing fortunes, but they might be ready to retire to their favorite islands and let the next generation tackle the problem; or to take jobs exercising their expertise in a new public banking arrangement with the stable backing of the government.

Daily Bell: You do a great deal of public speaking. What do you emphasize most in your talks?

Brown: Solutions, solutions, solutions. This nut can be cracked. We've been looking at the problem wrong. When we step outside the box and look again, it's all quite simple. Truth is simple.

Daily Bell: What are the most important - seminal -- articles of yours that you would encourage everyone to read? Where can they be found?

Brown: My articles can all be found on my website at WebofDebt.com. I try to write one every week or two, and they're quite topical, but the most popular (per the OpEdNews ratings) have been "It's the Derivatives, Stupid!", written in September 2008 after the Lehman/AIG collapse; "Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking" (December 29, 2008); and "Toward a Solution to the Debt Crisis in California" (July 13, 2009). My latest article is "The Public Option in Banking: How We Can Beat Wall Street at Its Own Game" (August 8, 2009), posted on the Huffington Post among other places.

What Ellen is proposing is really going back to the Colonial System of Banking: issuing money from the state bank as wealth rather than debt. That is the system Hitler used and it worked for Germany. That is the system FDR didn't use, and it didn't work for FDR. Hitler and FDR were elected in the same year. Five years later, Germany had gone from the poorest country in Europe to the wealthiest. The United States had gone from the Great Depression to still being in the Great Depression, but having a lot of good songs and Frank Capra movies to show for it.

Here are the After Thoughts with Scott Smith:

Wow. Ellen Brown is surely a brilliant, self-trained economist as well as a successful writer. Sharp as a needle, she lances through the rhetorical silliness of most financial writing to drive straight to the heart of the West's major problem: money is a debt not an asset.

And yet ... even despite this clear-eyed approach to finance, we retain some reservations, mostly based on our affinity for free-market economics. With all respect to the brilliant Ms. Brown, let us share them with you.

Debt-consuming money: We wonder if debt money is quite so mathematical proposition as she makes out. We think a considerable amount of money gets purged via bankruptcies and ruin in recessions. The money goes away as does the interest accrued, thus the system may be self-sustaining to a degree and the interest accrual never entirely overwhelming.

That makes a lot of sense...When you cram it all together and say it really fast.  Also, if you stick your foot in the door, they can't close the door in the middle of your encyclopedia sales pitch.  "The money goes away as does the interest accrued"...as does the property put up as collateral. It goes away...to the bank.  The little guy always gets stuck because his solvency is most often dependent on a regular income in the form of a paycheck. Really rich people can sip their drinks and say, "Shame on those ignorant poor people.  They bought what they could not afford. Tsk"

Money standard: We do believe the West can go back on a market based silver and gold standard. You don't have to divide up the gold in Fort Knox. All you have to do is assume that the system cannot stand but actually breaks down. Once it has broken down[And after people have started to eat other people, but before they have started to eat rich people...Ed.], paper money becomes worthless and people around the world begin to recirculate gold and silver as money. They take it out of their mattresses, their vaults, their pockets. It is a new, spontaneous order of market money. That's how a market-based hard money standard would come about. It would just happen. There would be no organizing force other than people's overwhelming desire to utilize a form of money that retained value. [And then Ayn Rand will come down in a cloud, surrounded by angels, wearing a diamond tiara...Ed.]

Trust in government: Third, we have a hard time with the idea that governments can be trusted with the money supply. Ms. Brown uses Lincoln as an example, [In case you didn't notice, Ellen Brown just fucking quoted Lincoln, who was referring to our form of Government: a democratic Republic: "of the people, by the people, for the people".  That's all.  She didn't say "Lincoln really does it for me. Now there's a real man: Lincoln. Mmm.... But watch Scott Smitch ignore EB's point and slam Lincoln...Ed. ] and unfortunately, given these days of Internet revisionism, that is perhaps not an overwhelming example. Lincoln was human, too. He didn't "free" the slaves until it was politically expedient, threw a number of his political and media opponents into jail and unleashed a Carthaginian trail of blood and destruction on the South toward the end of the war that left its cities leveled. From a monetary standpoint, he was the author of "greenbacks" that the Union used to fund the war and which quickly deteriorated to a value of nullity.

I thought it would be interesting to fact check this shorthand dismissal of the "greenback".  Here's what wikipedia has to say:

In the First Legal Tender Act, Congress limited the Treasury's emission of United States Notes to $150,000,000; however, by 1863, the Second Legal Tender Act, a Joint Resolution of Congress, and the Third Legal Tender Act had expanded the limit to $450,000,000, the option to exchange the notes for United States bonds at par had been revoked, and notes of $1 and $2 denominations had been introduced as the appearance of fiat currency had driven even silver coinage out of circulation. Over a century later, Ron Paul, reflecting on congress's failure to maintain the original limit, commented that "the printing of fiat currency is a heady wine". As a result of this inflation, the greenback went on to trade at a substantial discount from gold, which prompted Congress to pass the short-lived Anti-gold futures act of 1864, which was soon repealed after it seemed to accelerate the decline of the greenback.

The largest amount of greenbacks outstanding at any one time was calculated as $447,300,203.10. The Union's reliance on expanding the circulation of greenbacks eventually ended with the emission of Interest Bearing and Compound Interest Treasury Notes, and the passage of the National Banking Act. However, the end of the war found the greenbacks trading for only roughly half of their nominal value in gold.

At the end of the Civil War, some economists, such as Henry Charles Carey, argued for building on the precedent of fiat money and making the greenback system permanent. However, Secretary of the Treasury McCulloch argued that the Legal Tender Acts had been war measures, and that the United States should soon reverse them and return to the gold standard. The House of Representatives voted overwhelmingly to endorse the Secretary's view. With an eventual return to gold convertibility in mind, the Funding Act of April 12, 1866 was passed, authorizing McCulloch to retire $10 million of the Greenbacks within six months and up to $4 million per month thereafter. This he proceeded to do until only $356,000,000 were outstanding in February of 1868. By this point, the wartime economic boom was over, the crop harvest was poor, and a panic in Great Britain caused a recession and a sharp drop in prices in the United States. The contraction of the money supply was blamed for the deflationary effects, and led debtors to successfully agitate for a halt to the notes' retirement. [So let me get this straight: initially there was high inflation caused by circulating TOO MANY GREENBACKS, then the treasury took TOO MANY OUT OF CIRCULATION and this caused deflation.  Hmm. Maybe it's not the greenbacks themselves, but rather a matter of their proportion...Ed.]

In the early 1870s, Treasury Secretaries George S. Boutwell and William Adams Richardson maintained that, though Congress had mandated $356,000,000 as the minimum Greenback circulation, the old Civil War statutes still authorized a maximum of $400,000,000 - and thus they had at their discretion a "reserve" of $44,000,000. While the Senate Finance Committee under John Sherman disagreed, being of the opinion that the $356,000,000 was a maximum as well as a minimum, no legislation was passed to assert the Committee's opinion. Starting in 1872, Boutwell and Richardson used the "reserve" to counteract seasonal demands for currency, and eventually expanded the circulation of the Greenbacks to $382,000,000 in response to the Panic of 1873.[So the government issued MORE greenbacks to ease the Panic caused by the PRIVATE BANKING SYSTEM. Hmm...Ed.]

In June 1874, Congress officially capped the Greenback circulation at $382,000,000, and in January of 1875, passed the Specie Payment Resumption Act, which authorized a contraction in the circulation of Greenbacks to $300,000,000, and required the government to redeem them for gold, on demand, after the first of January 1879. As a result, the currency strengthened and by April 1876, the notes were on par with silver coins which then began to re-emerge into circulation. On May 31, 1878, the contraction in the circulation was halted at $346,681,016 - a level which would be maintained for almost 100 years afterwards. While $346,681,016 was a significant figure at the time, it is now a very small fraction of the total currency in circulation in the United States. The year 1879 found Sherman, now Secretary of the Treasury, in possession of sufficient specie to redeem notes as requested, but as this brought the value of the greenbacks into parity with gold for the first time since the Specie Suspension of December 1861, the public voluntarily accepted the greenbacks as part of the circulating medium.[But I thought the greenbacks "deteriorated to a value of nullity". Gold for nullity? WTF? Ed.]

While the United States Notes had been used as a form of debt issuance during the Civil War, afterwards they were used as a way of moderately influencing the money supply by the federal government - such as through the actions of Boutwell and Richardson. During the Panic of 1907, President Theodore Roosevelt attempted to increase liquidity in the markets by authorizing the Treasury to issue more Greenbacks, but the Aldrich-Vreeland Act provided for the needed flexibility in the National Bank Note supply instead.[Another Panic in the Private Banking system!!! Ed.] Eventually, the "need" for an elastic currency was addressed with the Federal Reserve Notes authorized by the Federal Reserve Act, and pressure to alter the circulating quantity of United States Notes subsided.
Comparison to Federal Reserve Notes
Both United States Notes and Federal Reserve Notes are parts of the national currency of the United States, and both have been legal tender since the gold recall of 1933. Both have been used in circulation as money in the same way. However, the issuing authority for them came from different statutes. United States Notes were created as fiat currency, in that the government has never categorically guaranteed to redeem them for precious metal - even though at times, such as after the specie resumption of 1879, federal officials were authorized to do so if requested. The difference between a United States Note and a Federal Reserve Note is that a United States Note represented a "bill of credit", where the currency was transferred into circulation free of interest. Federal Reserve Notes are based on debt purchased by the Federal Reserve, and thus generate seigniorage for the Federal Reserve System, which serves as a lending intermediary between the Treasury and the public.

Back to Ayn Rand...I mean Scott Smith

Lincoln, who was certainly a great man in some ways (depending how you define greatness) provides us with only one example of how the government deals with money. But there are many others. History is littered with debased currency. It is much wiser, in our opinion to let the market deal with money - and not the government.[Because private banking systems never have panics...Ahem. Ed.]

Business cycles and central banks: Finally, it should be clear to anyone reading the Daily Bell for any length of time that we believe it is central banks that are responsible for the West's destructive business cycles. From our point of view there is just no gainsaying the role of central banks in money production. Central banks overproduce money and subvert the natural cycle of the money marketplace. We[Meaning Ayn Rand and I, lying naked in a pile of gold...I am feeding Ayn amphetamines like they were grapes...our souls touching...that is, if we had souls. Actually the part of me that loves money is touching the part of her that loves speed...Ed.] are also free-banking oriented and tend to believe that fractional reserve banking would be OK in a market environment and that there are historical episodes that tend to prove this is so.

I think government should not be everywhere, but to deny its proper place is ludicrous. These types live in a fantasy where the private business does everything better, and that is just not true. There is a balance. Sometimes the marketplace works better, and sometimes government does better. If there is a REAL opportunity for competition then the market will often do better. But where there is no chance for competition, we have socialized roads, cops, fire departments, libraries. Balance.

Here's the last bit of Griffin, clinging to the idea of the magic marketplace, that has never, ever existed, ever. It is a fantasy founded on greed and amphetamine.

Griffin: The idea that whenever there is a problem the solution is for the government to go in and take control is one of the most absurd and childish concepts I have ever heard of. The idea that the government can do anything better than the free market is just based on complete absence of understanding how the free market works. The only thing I think the government can do better than anybody else is to fight a war. The only thing a government can do better is to kill and destroy, and that is what it is good at. If war is used to kill and destroy in defense of a nation, in defense but not as an aggressive act, and it is used to defend the lives, liberty and property of its citizens then war performs a proper function, in my view.

Daily Bell: So you see a need for some kind of limited government, practically speaking.

Griffin: It is tragic that we have to defend ourselves. But history shows if you cannot defend yourself then you become a slave to someone who moves in and takes over. So we need to have the killing machine, but that's about all.

Daily Bell: But not the banking system?

Griffin: The idea that government should be running the banks is absurd. The American government has been in the banking business since 1913 when the Fed was founded. [Because the Fed is a Central Private Bank? Ed.] The solution is not to get more into the banking business but to get the government out of it completely. So I would say no, let's get the government out of the banks completely and then make the banks follow the rules and regulations that any other business must follow. Give them no favoritism, no subsidy, no bailouts. Make them honor their contracts and if they fail then they fail. Let new banks come into existence.

Let new, Magic Banks come into existence.

[CrackSmokeRepublican]

Interesting comments there Christopher.

Always keep in mind:

Populist anti-Semitism worked its way into the 1896 campaign through the Morgan Bonds scandal. When the public learned that President Cleveland had sold bonds to a syndicate which included JP Morgan and the Rothschilds house, bonds which that syndicate was now selling for a profit, the Populists used it as an opportunity to uphold their view of history, and prove to the nation that Washington and Wall Street were in the hands of the international Jewish banking houses. The currency issue itself was loaded with anti-Semitism as the Populist returned again and again to crucifixion metaphors to argue against the gold standard. The reference was clear. The same Jews who were responsible for the death of Jesus were responsible for the currency crisis. The message was clear to the many Protestants who filled the ranks of the Populists.

http://projects.vassar.edu/1896/antisemitism.html

The 'Morgan Bonds'

by Ben Macri, Vassar '99


In February 1895 President Grover Cleveland was forced to strike a deal with J.P. Morgan which saved the United States Gold Reserves. At the time the United States was in the midst of a terrible depression and Cleveland's popularity was rapidly dwindling. Cleveland had continued to support the traditional gold standard while his party gradually jumped ship and merged with the Populist, bimetallic platform.

Understanding the crisis that the nation would undergo if the United States gold reserves disappeared, J.P. Morgan, magnate/financier, offered to help the government. Morgan (with a profit clearly in mind) offered to form a syndicate (headed by himself) which would buy bonds from the United States in exchange for 62 million dollars worth of European gold. Cleveland, unable to see an alternative, and realizing that it would be a matter of days before the gold reserves disappeared completely, agreed to the plan, and organized the bond sale. With the deal settled, the dollar managed to recover some of its value, and Cleveland could rest easy, knowing that the gold reserves were safe.

However, when news of this deal broke, public opinion turned against Cleveland even more than before. Most people ignored the fact that Cleveland had saved the United States' gold reserves. When people learned how profitable the deal turned out to be for the banks, who had immediately resold the bonds at marked-up rates, more contempt confronted Cleveland. There were even rumors that he had profited personally from the deal. The issue only helped to accelerate the decline of the Gold Democrats.

Populists jumped all over the issue, shouting that it was yet another example of Washington being in league with the international banks and Wall Street. To the Populists it was the perfect example of a conspiracy against the common man. There was an Anti Semitic thread to their argument as Populists railed against the Rothschilds House (a bank which was a member of the syndicate) as the source of the conspiracy, trying to suggest that Washington and Wall Street were in the hands of the Jewish banking houses of England, and that soon all of America would be as well.

Cleveland stood quietly by, trying to maintain his dignity as the public condemned the only decision he could have made given the circumstances. He and the few remaining Gold Democrats watched as even more of their party ran to the bimetallic platform, and waited silently, through the 1896 election, to see what the fate of their party would be.

In 1890 John Pierpont Morgan (1839-1913) inherited the business of his father, Junius P. Morgan, in 1890, one of the nation's leading financiers. The younger Morgan became a leading philanthropist and one of the nation's wealthiest men.

"Both attacked the President on the score of his negotiations with the foreign syndicate, Mr. Wolcott going to the extent of using some very coarse language. Mr. Lodge, who is coming to be known as a Senatorial pettifogger, devoted a half hour to abuse of the President, while professing to be in favor of the Hill resolution." From The New York Times, February 17, 1895.

"There was no longer any common ground for understanding between the silver and gold forces; and the agrarian regions were suffering too keenly to reason calmly. Bryan, denouncing the sale in the House, had the clerk first read Shylock's bond. The World declared that the syndicate was composed of bloodsucking Jews and aliens. [...]. By hundreds of thousands, hard handed Americans believed that Cleveland and Carlisle [Cleveland's Secretary of Treasury] had sold the credit of the republic to the Morgans and the Rothchilds, and had pocketed a share of the price. Their vituperative anger was additional evidence of a sectional and class bitterness that now made even armed revolution seem far from impossible. But Cleveland... was unmoved by abuse when he felt he had done right." Allan Nevins, from Grover Cleveland: A Study in Courage (p.665-666).

"...the blame lay upon the President. If he had saved the gold standard, he had not saved the country. But he never regretted his action. Years after his retirement, he said so. By that time no one was likely to accuse him of profiting from the deal himself, but he was still not forgiven for allowing the financiers to profit or for holding to gold when easy money was about to be achieved." Rexford G. Tugwell, from Grover Cleveland (p.259).

http://projects.vassar.edu/1896/morganbonds.html

[CrackSmokeRepublican]

Almost the exact same story is true today...