'Wall Street' vs. 'Bailout' and the Politics of Financial Reform

Wall Street' vs. 'Bailout' and the Politics of Financial Reform

By Robert Schlesinger, Thomas Jefferson Street blog

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Thomas Jefferson certainly would not support any type of financial reform legislation that included a central banking system using fraction reserve lending procedures to issue money as debt. If you check his actions, you will find that he refused to renew the charter for the First National Bank of the United States in 1811. According to some authors, based on reports of severe warnings from British bankers, his refusal to renew the banks charter was a principal cause of the war of 1812.

Since it was formalized in 1694 with the establishment of the Bank of England, The British Monetary model has proven itself to be a national disaster wherever it has been used, make a few bankers and shareholders incomparably wealthy while reducing the general population to a subsistence level of poverty. Creating money as debt, the system is inherently flawed, the banks creating only the principal of loans, their requiring the repayment of that principal with additional interest that no one created, borrowers always owning the banks more money tha existes in the economy, the banks continually creating new and larger loans, using the newly created money to cover this shortfall, and operating like an ordinary Ponzi Scheme, the scheme crashing with such regularity as to be named “the normal business cycle.”

Furthermore, Jefferson accurately warned the nation of the dangers of allowing private banking corporations to issue the nation’s currency. Because he failed to follow Benjamin Franklin’s lead and reestablish the American Monetary system, issuing American currency as fiat legal tender, the nation was manipulated into allowing the establishment of the Second National Bank of the United States. This bank was put out of business by Andrew Jackson, his understanding the nature of the banks, transferred the nation’s gold and money deposits into state chartered banks.

Abraham Lincoln almost got the system right when he ordered the treasury department to simply issue American money to fund fighting the Civil War. Had he not been assassinated, Lincoln may have adopted Franklin’s complete monetary package, consisting of government issued currency and state owned Banks. The strength of Franklin’s system is government’s power and flexibility to lend money like a bank, create and spend money directly into the economy as receipts for goods and services, and the authority to fine-tune the economy using tax policies.

The British monetary model is a great threat to the prosperity and economic stability of the United States and the world. Even today, no government can regulate this monetary system to meet the need of the people who create real world wealth.

Bill Parks of MD 10:32PM April 20, 2010