June 4, 2012
Reform of the US Monetary System: Message of 12 Year Old Victoria Grant
Out of the Mouths of Babes: Twelve-Year-Old Money Reformer Tops a Million Views
by Ellen Brown
The youtube video of 12 year old Victoria Grant speaking at the Public Banking in America conference last month has gone viral, topping a million views on various websites.
Monetary reform—the contention that
governments, not banks, should create and lend a nation’s money—has
rarely even made the news, so this is a first. Either the times they
are a-changin’, or Victoria managed to frame the message in a way that
was so simple and clear that even a child could understand it.
Basically, her message was that banks
create money “out of thin air” and lend it to people and governments at
interest. If governments borrowed from their own banks, they could keep
the interest and save a lot of money for the taxpayers.
She said her own country of Canada
actually did this, from 1939 to 1974. During that time, the
government’s debt was low and sustainable, and it funded all sorts of
remarkable things. Only when the government switched to borrowing
privately did it acquire a crippling national debt.
Borrowing privately means selling bonds
at market rates of interest (which in Canada quickly shot up to 22%),
and the money for these bonds is ultimately created by private banks.
For the latter point, Victoria quoted Graham Towers, head of the Bank of
Canada for the first twenty years of its history. He said:
Each and every time a bank makes a loan, new bank
credit is created — new deposits — brand new money. Broadly speaking,
all new money comes out of a Bank in the form of loans. As loans are
debts, then under the present system all money is debt.
Towers was asked, “Will you tell me why
a government with power to create money, should give that power away to
a private monopoly, and then borrow that which parliament can create
itself, back at interest, to the point of national bankruptcy?” He
replied, “If Parliament wants to change the form of operating the
banking system, then certainly that is within the power of Parliament.”
In other words, said Victoria, “If the
Canadian government needs money, they can borrow it directly from the
Bank of Canada. The people would then pay fair taxes to repay the Bank
of Canada. This tax money would in turn get injected back into the
economic infrastructure and the debt would be wiped out. Canadians
would again prosper with real money as the foundation of our economic
structure and not debt money. Regarding the debt money owed to the
private banks such as the Royal Bank, we would simply have the Bank of
Canada print the money owing, hand it over to the private banks, and
then clear the debt to the Bank of Canada.”
Problem solved; case closed.
But critics said, “Not so fast.” Victoria might be charming, but she was naïve.
One critic was William Watson, writing in the Canadian newspaper The National Post in an article titled “No, Victoria, There Is No Money Monster.”
Interestingly, he did not deny Victoria’s contention that “When you
take out a mortgage, the bank creates the money by clicking on a key and
generating ‘fake money out of thin air.’” Watson acknowledged:
Well, yes, that’s true of any “fractional-reserve”
banking system. Even before they were regulated, even before there was a
Bank of Canada, banks understood they didn’t have to keep reserves
equal to the total amount of money they’d lent out: They could count on
most depositors most of the time not showing up to take out their money
all at once. Which means, as any introduction to monetary economics will
tell you, banks can indeed “create” money.
What he disputed was that the Canadian
government’s monster debt was the result of paying high interest rates
to banks. Rather, he said:
We have a big public debt because, starting in the
early 1970s and continuing for three full decades, our governments spent
more on all sorts of things, including interest, than they collected in
taxes. . . . The problem was the idea, still widely popular, from the
Greek parliament to the streets of Montreal, that governments needn’t
pay their bills.
That contention is countered, however,
by the Canadian government’s own Auditor General (the nation’s top
accountant, who reviews the government’s books). In 1993, the Auditor
General noted in his annual report:
[The] cost of borrowing and its compounding effect
have a significant impact on Canada’s annual deficits. From
Confederation up to 1991-92, the federal government accumulated a net
debt of $423 billion. Of this, $37 billion represents the accumulated
shortfall in meeting the cost of government programs since
Confederation. The remainder, $386 billion, represents the amount
the government has borrowed to service the debt created by previous
In other words, 91% of the debt consists of compounded interest charges.
Subtract those and the government would have a debt of only C$37
billion, very low and sustainable, just as it was before 1974.
Mr. Watson’s final argument was that borrowing from the government’s own bank would be inflationary. He wrote:
Victoria’s solution is that instead of paying market
rates the government should borrow directly from the Bank of Canada and
pay only token rates of interest. Because the government owns the bank,
the tax revenues it raises in order to pay that interest would then
somehow be injected directly back into the economy. In other words,
money literally printed to cover the government’s deficit would be put
into circulation. But how is that not inflationary?
Let’s see. The government can borrow
money that ultimately comes from private banks, which admittedly create
it out of thin air, and soak the taxpayers for a whopping interest bill;
or it can borrow from its own bank, which also creates the money out of
thin air, and avoid the interest.
Even a 12 year old can see how this argument is going to come out.
April 30, 2012
Our future with private banking --"bankstering".
|Our future with private banking --"bankstering".
When the G20 meet, Canada will 'come on side' with some billions
for the IMF to fund the bank rescues in Europe.
Spain and Italy will go the way of Ireland, Portugal and Greece.
With Canada's REQUIRED contributions, we are assured of larger deficits,
more usurious debt , austerity except for the police, prisons and military
less and less attention to our interests and complete extinction of accountability.
This is the NWO (New World Order)
April 30, 2012
The European Stabilization Mechanism, Or How Goldman Sachs Captured Europe
The European Stabilization Mechanism, Or How Goldman Sachs Captured Europe
by Ellen Brown
, April 19, 2012
The Goldman Sachs coup that
failed in America has nearly succeeded in Europe—a permanent,
irrevocable, unchallengeable bailout for the banks underwritten by the
In September 2008, Henry Paulson,
former CEO of Goldman Sachs, managed to extort a $700 billion bank
bailout from Congress. But to pull it off, he had to fall on his knees
and threaten the collapse of the entire global financial system and the
imposition of martial law; and the bailout was a one-time affair.
Paulson’s plea for a permanent bailout fund—the Troubled Asset Relief Program or TARP—was opposed by Congress and ultimately rejected.
By December 2011, European Central Bank
president Mario Draghi, former vice president of Goldman Sachs Europe,
was able to approve a 500 billion Euro bailout
for European banks without asking anyone’s permission. And in January
2012, a permanent rescue funding program called the European Stability
Mechanism (ESM) was passed in the dead of night
with barely even a mention in the press. The ESM imposes an open-ended
debt on EU member governments, putting taxpayers on the hook for
whatever the ESM’s Eurocrat overseers demand.
The bankers’ coup has triumphed in
Europe seemingly without a fight. The ESM is cheered by Eurozone
governments, their creditors, and “the market” alike, because it means
investors will keep buying sovereign debt. All is sacrificed to the
demands of the creditors, because where else can the money be had to
float the crippling debts of the Eurozone governments?
There is another alternative to debt
slavery to the banks. But first, a closer look at the nefarious
underbelly of the ESM and Goldman’s silent takeover of the ECB . . . .
The Dark Side of the ESM
The ESM is
a permanent rescue facility slated to replace the temporary European
Financial Stability Facility and European Financial Stabilization
Mechanism as soon as Member States representing 90% of the capital
commitments have ratified it, something that is expected to happen in
July 2012. A December 2011 youtube video titled “The shocking truth of the pending EU collapse!”, originally posted in German, gives such a revealing look at the ESM that it is worth quoting here at length. It states:
The EU is planning a new treaty called the European
Stability Mechanism, or ESM: a treaty of debt. . . . The authorized
capital stock shall be 700 billion euros. Question: why 700 billion?
[Probable answer: it simply mimicked the $700 billion the U.S. Congress
bought into in 2008.] . . . .
[Article 9]: “. . . ESM Members hereby irrevocably
and unconditionally undertake to pay on demand any capital call made on
them . . . within seven days of receipt of such demand.” . . . If the
ESM needs money, we have seven days to pay. . . . But what does
“irrevocably and unconditionally” mean? What if we have a new
parliament, one that does not want to transfer money to the ESM? . . . .
[Article 10]: “The Board of Governors may decide to
change the authorized capital and amend Article 8 ... accordingly.”
Question: . . . 700 billion is just the beginning? The ESM can stock
up the fund as much as it wants to, any time it wants to? And we would
then be required under Article 9 to irrevocably and unconditionally pay
[Article 27, lines 2-3]: “The ESM, its property,
funding, and assets . . . shall enjoy immunity from every form of
judicial process . . . .” Question: So the ESM program can sue us, but
we can’t challenge it in court?
[Article 27, line 4]: “The property, funding and
assets of the ESM shall . . . be immune from search, requisition,
confiscation, expropriation, or any other form of seizure, taking or
foreclosure by executive, judicial, administrative or legislative
action.” Question: . . . [T]his means that neither our governments, nor
our legislatures, nor any of our democratic laws have any effect on the
ESM organization? That’s a pretty powerful treaty!
[Article 30]: “Governors, alternate Governors,
Directors, alternate Directors, the Managing Director and staff members
shall be immune from legal process with respect to acts performed by
them . . . and shall enjoy inviolability in respect of their official
papers and documents.” Question: So anyone involved in the ESM is off
the hook? They can’t be held accountable for anything? . . . The
treaty establishes a new intergovernmental organization to which we are
required to transfer unlimited assets within seven days if it so
requests, an organization that can sue us but is immune from all forms
of prosecution and whose managers enjoy the same immunity. There are no
independent reviewers and no existing laws apply? Governments cannot
take action against it? Europe’s national budgets in the hands of one
single unelected intergovernmental organization? Is that the future of
Europe? Is that the new EU – a Europe devoid of sovereign democracies?
The Goldman Squid Captures the ECB
Last November, without fanfare and
barely noticed in the press, former Goldman exec Mario Draghi replaced
Jean-Claude Trichet as head of the ECB. Draghi wasted no time doing for
the banks what the ECB has refused to do for its member
governments—lavish money on them at very cheap rates. French blogger
Simon Thorpe reports:
On the 21st of December, the ECB “lent” 489 billion
euros to European Banks at the extremely generous rate of just 1% over 3
years. I say “lent”, but in reality, they just ran the printing
presses. The ECB doesn’t have the money to lend. It’s Quantitative
The money was gobbled up virtually instantaneously by
a total of 523 banks. It’s complete madness. The ECB hopes that the
banks will do something useful with it – like lending the money to the
Greeks, who are currently paying 18% to the bond markets to get money.
But there are absolutely no strings attached. If the banks decide to pay
bonuses with the money, that’s fine. Or they might just shift all the
money to tax havens.
At 18% interest, debt doubles
in just four years. It is this onerous interest burden, not the debt
itself, that is crippling Greece and other debtor nations. Thorpe
proposes the obvious solution:
Why not lend the money to the Greek government
directly? Or to the Portuguese government, currently having to borrow
money at 11.9%? Or the Hungarian government, currently paying 8.53%. Or
the Irish government, currently paying 8.51%? Or the Italian government,
who are having to pay 7.06%?
The stock objection to that alternative
is that Article 123 of the Lisbon Treaty prevents the ECB from lending
to governments. But Thorpe reasons:
My understanding is that Article 123 is there to
prevent elected governments from abusing Central Banks by ordering them
to print money to finance excessive spending. That, we are told, is why
the ECB has to be independent from governments. OK. But what we have now
is a million times worse. The ECB is now completely in the hands of the
banking sector. “We want half a billion of really cheap money!!” they
say. OK, no problem. Mario is here to fix that. And no need to consult
anyone. By the time the ECB makes the announcement, the money has
At least if the ECB was working under
the supervision of elected governments, we would have some influence
when we elect those governments. But the bunch that now has their grubby
hands on the instruments of power are now totally out of control.
Goldman Sachs and the financial
technocrats have taken over the European ship. Democracy has gone out
the window, all in the name of keeping the central bank independent from
the “abuses” of government. Yet the government is the people—or
it should be. A democratically elected government represents the
people. Europeans are being hoodwinked into relinquishing their
cherished democracy to a rogue band of financial pirates, and the rest
of the world is not far behind.
Rather than ratifying the draconian ESM
treaty, Europeans would be better advised to reverse article 123 of the
Lisbon treaty. Then the ECB could issue credit directly to its member
governments. Alternatively, Eurozone governments could re-establish
their economic sovereignty by reviving their publicly-owned central
banks and using them to issue the credit of the nation for the benefit
of the nation, effectively interest-free. This is not a new idea but
has been used historically to very good effect, e.g. in Australia through the Commonwealth Bank of Australia and in Canada through the Bank of Canada.
Today the issuance of money and credit
has become the private right of vampire rentiers, who are using it to
squeeze the lifeblood out of economies. This right needs to be returned
to sovereign governments. Credit should be a public utility, dispensed
and managed for the benefit of the people.
To add your signature to a letter to parliamentarians blocking ratification of the ESM, click here.
Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org.
In Web of Debt, her latest of eleven books, she shows how a private
cartel has usurped the power to create money from the people themselves,
and how we the people can get it back. Her websites are http://WebofDebt.com and http://EllenBrown.com.
April 30, 2012
Oh Canada! Imposing Austerity on the World’s Most Resource-rich Country
Oh Canada! Imposing Austerity on the World’s Most Resource-rich Country
by Ellen Brown
April 1 2012
Even the world’s most resource-rich country has now been caught in the debt trap. Its
once-proud government programs are being subjected to radical budget
cuts—cuts that could have been avoided if the government had not quit
borrowing from its own central bank in the 1970s.
March 29 in Ottawa, the Canadian House of Commons passed the federal
government’s latest round of budget cuts and austerity measures. Highlights
included chopping 19,200 public sector jobs, cutting federal programs
by $5.2 billion per year, and raising the retirement age for millions of
Canadians from 65 to 67. The justification for the cuts was a massive federal debt that is now over C$ 581 billion, or 84% of GDP.
An online budget game furnished by the local newspaper the Globe and Mail gave readers a chance to try to balance the budget themselves. Possibilities
included slashing transfer payments for elderly benefits, retirement
programs, health benefits, and education; cutting funding for
transportation, national defense, economic development and foreign aid;
and raising taxes. An article on
the same page said, “The government, in reality, doesn’t have that many
tools at its disposal to close a large budgetary deficit. It can either
raise taxes or cut departmental program spending.”
seems that no gamer, lawmaker or otherwise, was offered the opportunity
to toy with the number one line item in the budget: interest to
creditors. A chart on the website of the Department of Finance Canada titled “Where Your Tax Dollar Goes” showed interest payments to be 15% of the budget—more than health care, social security, and other transfer payments combined. The page was dated 2006 and was last updated in 2008, but the percentages are presumably little different today.
Penny wise, Pound Foolish
other cuts in the 2012 budget, the government announced that it would
be discontinuing the minting of Canadian pennies, which now cost more
than a penny to make. The
government is focusing on the pennies and ignoring the pounds—the
massive share of the debt that might be saved by borrowing from the
government’s own Bank of Canada.
Between 1939 and 1974, the government actually did borrow from its own central bank. That made its debt effectively interest-free, since the government owned the bank and got the benefit of the interest. According
to figures supplied by Jack Biddell, a former government accountant,
the federal debt remained very low, relatively flat, and quite
sustainable during those years. (See his chart below.) The government successfully funded major public projects
simply on the credit of the nation, including the production of
aircraft during and after World War II, education benefits for returning
soldiers, family allowances, old age pensions, the Trans-Canada
Highway, the St. Lawrence Seaway project, and universal health care for
The debt shot up only after 1974. That was when the Basel Committee
was established by the central-bank Governors of the Group of Ten
countries of the Bank for International Settlements (BIS), which
included Canada. A key objective of the Committee was to maintain “monetary and financial stability.” To
achieve that goal, the Committee discouraged borrowing from a nation’s
own central bank interest-free, and encouraged borrowing instead from
private creditors, all in the name of “maintaining the stability of the
presumption was that borrowing from a central bank with the power to
create money on its books would inflate the money supply and prices. Borrowing
from private creditors, on the other hand, was considered not to be
inflationary, since it involved the recycling of pre-existing money. What the bankers did not reveal, although they had long known it themselves, was that private banks create the money they lend just as public banks do. The
difference is simply that a publicly-owned bank returns the interest to
the government and the community, while a privately-owned bank siphons
the interest into its capital account, to be re-invested at further
interest, progressively drawing money out of the productive economy.
debt curve that began its exponential rise in 1974 tilted toward the
vertical in 1981, when interest rates were raised by the U.S. Federal
Reserve to 20%. At 20% compounded annually, debt doubles in under four years. Canadian rates went as high as 22% during that period. Canada has now paid over a trillion Canadian dollars in interest on its federal debt—nearly twice the debt itself. If it had been borrowing from its own bank all along, it could be not only debt-free but sporting a hefty budget surplus today. That is true for other countries as well.
The Bankers’ Silent Coup
Why are governments paying private financiers to generate credit they could be issuing themselves, interest-free? According
to Professor Carroll Quigley, Bill Clinton’s mentor at Georgetown
University, it was all part of a concerted plan by a clique of
international financiers. He wrote in Tragedy and Hope in 1964:
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 private meetings and conferences. The
apex of the system was to be the Bank for International Settlements in
Basel, Switzerland, a private bank owned and controlled by the world's
central banks which were themselves private corporations.
central bank . . . 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
In December 2011, this charge was echoed in a lawsuit filed in Canadian federal court by two Canadians and a Canadian economic think tank. Constitutional
lawyer Rocco Galati filed an action on behalf of William Krehm, Ann
Emmett, and COMER (the Committee for Monetary and Economic Reform) to
restore the use of the Bank of Canada to its original purpose, including
making interest free loans to municipal, provincial and federal
governments for “human capital” expenditures (education, health, and
other social services) and for infrastructure. The
plaintiffs state that since 1974, the Bank of Canada and Canada’s
monetary and financial policy have been dictated by private foreign
banks and financial interests led by the BIS, the Financial Stability
Forum (FSF) and the International Monetary Fund (IMF), bypassing the
sovereign rule of Canada through its Parliament.
this silent coup has been so well obscured that governments and gamers
alike are convinced that the only alternatives for addressing the debt
crisis are to raise taxes, slash services, or sell off public assets. We
have forgotten that there is another option: cut the debt by borrowing
from the government’s own bank, which returns its profits to public
coffers. Cutting out interest has been shown to reduce the average cost of public projects by about 40%.
Game over: we win.
Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In
Web of Debt, her latest of eleven books, she shows how a private cartel
has usurped the power to create money from the people themselves, and
how we the people can get it back. Her websites are http://WebofDebt.com
and http://EllenBrown.com The Public Banking Institute’s first conference is April 26th-28th in Philadelphia.
January 22, 2012