Debt Slavery – Why It Destroyed Rome, Why It Will Destroy Us Unless It’s Stopped

by MICHAEL HUDSON

Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by cancelling the debts and redistributing property or taking its usufruct for the state.

Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.

By giving taxpayers this voice in government, the Dutch and British democracies provided creditors with much safer claims for payment than did kings and princes whose debts died with them. But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.

This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, also communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector.

Near Eastern rulers proclaimed clean slates for debtors to preserve economic balance

Charging interest on advances of goods or money was not originally intended to polarize economies. First administered early in the third millennium BC as a contractual arrangement by Sumer’s temples and palaces with merchants and entrepreneurs who typically worked in the royal bureaucracy, interest at 20 per cent (doubling the principal in five years) was supposed to approximate a fair share of the returns from long-distance trade or leasing land and other public assets such as workshops, boats and ale houses.

As the practice was privatized by royal collectors of user fees and rents, “divine kingship” protected agrarian debtors. Hammurabi’s laws (c. 1750 BC) cancelled their debts in times of flood or drought. All the rulers of his Babylonian dynasty began their first full year on the throne by cancelling agrarian debts so as to clear out payment arrears by proclaiming a clean slate. Bondservants, land or crop rights and other pledges were returned to the debtors to “restore order” in an idealized “original” condition of balance. This practice survived in the Jubilee Year of Mosaic Law in Leviticus 25.

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via Debt Slavery – Why It Destroyed Rome, Why It Will Destroy Us Unless It’s Stopped » Counterpunch: Tells the Facts, Names the Names.

Big Banks Plead with Customers Not to Move Their Money

Yes, The Big Banks DO Care If We Move Our Money

650,000 customers moved $4.5 billion dollars out of the big banks and into smaller banks and credit unions in the last month.

But there is a myth making the rounds that the big banks don’t really care if we move our money. For example, one line of reasoning is that no matter how many people move their money, the Fed and Treasury will just bail out the giants again.

But many anecdotes show that the too big to fails do, in fact, care.

Initially, of course, if the big banks really didn’t care, they wouldn’t have prevented protesters from closing their accounts.

NBC notes that – in response to inquiries regarding how many people have moved their money – Bank of America refused to provide figures, and instead sent the following defensive email:

“Bank of America continues to be a great place for customers to manage their everyday finances and achieve their savings goals,” [Colleen Haggerty, a spokeswoman for Bank of America’s Southern California operations] said in an email. “We offer customers more choice and convenience, including industry-leading fraud protection, access to thousands of banking centers and ATMs, and the best online and mobile banking, which allow customers to bank on their terms 24/7.”

A writer noted at Daily Kos:

At Wells Fargo, my sister walked up to the teller and politely asked to close her account. The teller said, “No problem.” She pulled up her account and saw the balance and told her that due to the amount she had to speak with the branch manager. The branch manager came out. He was probably 30 years old and was very arrogant. He asked my sister why she wanted to close her account and my sister told him she thought Wells Fargo was part of the problem with the economy. He went thru some talking points about why she shouldn’t move her money, but my sister didn’t back down. When he asked her where she was going she told him that she would be banking at the North Carolina State Employees Credit Union. She isn’t a state employee, but anyone can join if you are related to a state employee. It turns out her husband is. Anyway, the bankster told her “You’ll be back. Credit unions can’t provide the services you need.” We’ll see about that. She withdrew over $200k from Wells Fargo.

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via Big Banks Plead with Customers Not to Move Their Money.

The Return of Milton Friedman Via NGDP Revenue Targeting

Milton Friedman

As an avowed enthusiast for the idea of changing central banks’ goals to nominal GDP targeting, I would be remiss in not calling attention to a new Goldman Sachs research note produced by Jan Hatzius and Sven Jari Stehn. I’m unable to link, unfortunately, but the authors argue that NGDP targeting is consistent with the Fed’s dual mandate and if implemented credibly would improve economic performance. – The Economist

Dominant Social Theme: If we could just rationalize money printing and make it scientific, it would work! Sure it would! It would! It really would!

Free-Market Analysis: Like a bad guest at a dinner party, Milton Friedman won’t go away. Now he is returning in the guise of the anonymous “Washington” writer for the Economist magazine. Just like Friedman, he has the idea that central banking can be run scientifically. In fact, it cannot.

Central banking was created to fund the British Crown’s wars and it has never been anything but a brutal and destructive force. Giving a handful of men the power to print money and monitor its price and volume is bound to cause unmitigated disasters. In fact, it has.

Booms caused by monetary stimulation inevitably give way to busts. There is no way for the hand of man to monitor money. Only the free market itself, through monetary competition and the historical evolution of gold and silver as money can do that. But that doesn’t stop the Anglosphere power elite from trying.

From our perspective, Friedman was surely a formal or at least informal agent of Money Power. The mainstream libertarian community still promotes Friedmanite “free-market” solutions and certainly his Chicago Fresh Water school, located primarily within the metaphorical ambit of the Chicago School of Economics, has been extraordinarily influential.

But we’ve never been great fans of Milton Friedman (or at least not after we became “hip” to his agenda), mostly because of his strenuous attempts to justify central banking. Money as much as war is the health of the State. In fact, states seek ownership of money to FUND wars. The control of money by the State is paramount.

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via The Daily Bell – The Return of Milton Friedman Via NGDP Revenue Targeting.

What is money?

We spend a lot of time thinking about money, one way or another. We think about how to get our hands on it, how to keep it safe and how to spend it. When we aren’t asleep, there’s a good chance that we’re paying attention to money. But while money is never far from our thoughts, there is something curious about our relationship with it. For all that we use it to get through the day, most of us don’t know what it is.

I mean, we know what it can do. We know how much we have, more or less. We know what things cost and so we have some idea of what we can afford at any given moment. When we start thinking about the future, how long we might live and how much money we’ll need, we tend to want to think about something else. But money itself escapes our calculations. For the most part we don’t think to ask where it comes from or what it is, in itself. The advantages of having money and the consequences of having none loom so large that we seldom stop to wonder about money as such.

Today is as good a day as any to explain where money comes from and why it matters. On Thursday, the Bank of England announced another £75 billion of “quantitative easing”. If you don’t know what that means or vaguely think it has something to do with “printing money”, it is probably because you don’t know what money is. All will be revealed in what follows. OK. Are you ready to know where money comes from, to know the truth jealously guarded from the dawn of recorded time?

Money is lent into existence by banks

There’s nothing complicated going on behind the scenes. The great secret is that there isn’t really much of a secret. Yet the truth about money eludes us for most of the time.

The economist and ironist JK Galbraith once wrote that “the process by which banks create money is so simple that the mind is repelled. When something so important is involved, a deeper mystery seems only decent”. Offered the unadorned truth, stripped of any technocratic flim-flam, we can scarcely believe it. It seems preposterous that money should have such humble origins, as though it is beneath money’s dignity that it should begin life at a banker’s keystroke.

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via What is money? – Opinion – Al Jazeera English.